sept 11/Raid on gold and silver trying to get gold below $1100 and silver below 14.00 dollars/attempt failed/South African mining stocks in disarray/Hong Kong comex has one day withdrawal of 19.1 tonnes of physical gold/TED spread rises again for first time in quite a while signalling USA banks ailing/Dealer gold still remains just above 5 tonnes as no gold again enters the gold vault vaults at the comex/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1103.50 down $6.00   (comex closing time)

Silver $14.49 down 15 cents.


In the access market 5:15 pm

Gold $1107.70

Silver:  $14.58

Before beginning, I would like to point out that all the South African mines tonight are in severe trouble.  The country mines a considerable 145 tonnes per year.  However many mines are mining at 5,000 ft.  The miners want an increase in their wages. I would also like to point out that the temperature inside these mines at 5,000 ft can rise to 130 degrees F.  Generally speaking, all of South African mines are operating in the red.


First, here is an outline of what will be discussed tonight:

At the gold comex today we had a poor delivery day, registering 3 notices for 300 ounces  Silver saw 77 notices for 385,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 218.80 tonnes for a loss of 84 tonnes over that period.

In silver, the open interest fell by 2319 contracts despite the fact that silver was up in price by 7 cents yesterday. Again, our banker friends tried to use the opportunity to cover as many silver shorts as they could.  The total silver OI now rests at 153,604 contracts   In ounces, the OI is still represented by .768 billion oz or 109% of annual global silver production (ex Russia ex China).

In silver we had 77 notices served upon for 385,000 oz.

In gold, the total comex gold OI fell to 417,487 for a loss of 397 contracts. We had 3 notices filed for 300 oz today.

Last last night we had no changes in tonnage at the GLD,  thus the inventory rests tonight at 678.18 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. It sure looks like 670 tonnes will be the rock bottom inventory in GLD gold. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold will be the FRBNY and the comex.   In silver, we had no changes in silver inventory at the SLV /Inventory rests at 322.06 million oz.

We have a few important stories to bring to your attention today…

1. Today, we had the open interest in silver fall by 2319 contracts down to 153,604 despite the fact that silver was up by 7 cents in price with respect to yesterday’s trading.   The total OI for gold fell by 397 contracts to 417,498 contracts, despite the fact that gold was up by $7.30 yesterday.

(report Harvey)

2.Gold trading overnight, Goldcore

(/Mark OByrne)

3.  COT report


4.  Trading overnight from China commencing at 9:30 pm est last night


 5. Russia has sent armaments to Syria trying to shore up Assad as the USA and NATO try to shore up Assad’s enemies. It seems that Iran has had enough and they seem to be anxious to enter into the fray.  If this is true, no doubt Israel must step in.  The war of words between Washington and Moscow are getting louder by the minute.
(2 stories/zero hedge)
6. Russia is making natural gas pipeline deals totally bypassing  the Ukraine, Bulgaria and Slovakia infuriating the west,
What do you expect them to do?
(zero hedge)
7. The state owned Brazilian oil company Petrobras saw its 100 yr maturity bond falter to 70 cents on the dollar and a yield of 10%.  S and P lowered the boom on grading this  operation to junk.  Now worldwide all pension funds must liquidate as they are not allowed to carry them in their portfolios once two agencies grades their debt at junk:
(zero hedge)
8. Oil related commentaries
The Bershidsky story goes in detail why the USA is losing the shale battle with the Saudis
(three stories/zero hedge/Bershidsky)
9. Crane collapses in Mecca/strange on 9:11
(zero hedge)

10.  USA stories/Trading of equities NY


a) Odd trading behaviour at 6:12 am explained  (zero hedge)


b) Producer Prices hotter than ever at .9%.  This raises the needle a little for a fed rate hike (zerohedge)

c) University of Michigan consumer confidence report shocks the street by falling from 83.4 to 76.4 on expectations of a reading of 91.1

Remember the consumer is 70% of USA GDP.

d) On the 15th of September the Fed releases the all important consumer spending report.  We get a preliminary look at the numbers from two reports:

i) Gallup

ii.  Internal Bank of America report

both data points indicate a lousy August spending by consumers.

e) The big hedge fund Horseman Global has outperformed 99% of its peers for the last few years.  The CEO explains why he is short the market and why Chinese devaluation will eventually be much greater

(zero hedge)

f) Trouble at Wal-Mart.  In March Wal-Mart decided to raise the minimum wage to employees to $15.00 per hour.  Total cost to the firm 1 billion dollars.

However that set in motion cost cutting moves which hurt the employees, namely

i) lower number of hours worked

ii the firing of many workers

g/ The TED spread rise is back again.  Remember in 2010-2011 the huge rise in the 3 month libor vs 3 month treasury bills signifies bank health issues.  Well they are back

(Jeffry Snider/Alahambra Partners)


h) now Wal-Mart is asking suppliers for fees to help offset the big wage cost.  Many suppliers are rebelling stating that the incrased fees would put them in bankruptcy

(zero hedge)

11.  Physical stories:

  1. Pummeling time again as gold and silver whacked (zero hedge)
  2. Citibank employees shared data from central bank trading with investors  (Reuters/GATA)
  3. Glencore downgraded again by Moody’s as they state the firm has not done enough. They lowered the credit rating on them which will create huge problems for its trading desk for commodities (zero hedge)
  4. 12 banks settle on price fixing on credit default swaps. (Reuters/GATA)
  5. Dave Kranzler/IRD on the huge gold tonnage demanded and removed from the Hong Kong comex on a daily basis.  Today 19.1 tonnes.  Folks this is DAILY DEMAND  (Kranzler/IRD)
  6.  Jessie; on the above story of huge gold demand from SGE/Jessie American cafe

12.  This week’s wrap with with Greg Hunter of USAWatchdog


and well as other commentaries…

Let us head over and see the comex results for today.

The total gold comex open interest fell from  417,895 down to 417498 for a loss of 397 contracts despite the fact that  gold was up $7.30 with respect to yesterday’s trading.   For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter continued with its decline as gold ounces standing rose. What is also interesting is that the LBMA gold is continually witnessing a 7.00 plus premium spot/next nearby month as gold is now in backwardation over there. We now enter the delivery month of September and here the OI fell by 20 contracts down to 140 . We had 1 notice filed yesterday so we lost 19 contracts or 1900 additional oz will not stand for delivery in this non active month of September. The next active delivery month is October and here the OI fell by 1645 contracts down to 23,883. The big December contract saw it’s OI rise by 478 contracts from 285,062 up to 285,540. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was estimated at 101,845 which is poor. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 127,882 contracts.
Today we had 3 notices filed for 300 oz.
And now for the wild silver comex results. Silver OI fell by 2319 contracts from 155,923 down to 153,604 despite the fact that silver was up by 7 cents in price yesterday . As mentioned above we always have a huge contraction in the OI of an upcoming active precious metal month.  The bankers continue to pull their hair out trying to extricate themselves from their silver mess (the continued high silver OI with it’s extremely low price, combined with the banker’s massive physical shortfall) as the world senses something is brewing in the silver arena (judging from the high volume every day at the comex). We are now in the active delivery month of September. Here the OI fell by 141 contracts to 545. We had 136 notices filed yesterday, so we lost 5 contracts or an additional 25,000 oz will not stand for delivery in this active delivery month of September.
The big December contract saw its OI fall by 1526 contracts down to 119,304.The estimated volume today was estimated at 23,837 contracts (just comex sales during regular business hours) which is poor.  The confirmed volume yesterday (regular plus access market) came in at 37,504 contracts which is good in volume.
We had 77 notices filed for 385,000 oz.

September contract month:

Initial standings

September 11.2015

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz 385.800 oz



10 kilobars

Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil oz
No of oz served (contracts) today 3 contracts

 (300 oz)

No of oz to be served (notices) 137 contracts (13,700 oz)
Total monthly oz gold served (contracts) so far this month 20 contracts

(2,000 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 192,068.3   oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
we had 0 dealer deposits
total dealer deposit:  zero
We had 1 customer withdrawals:
 i) Out of Manfra:  380.800 oz  12 kilobars
total customer withdrawal: 380.80 oz
We had 0 customer deposits:

Total customer deposit: nil  oz

We had 0  adjustments:

JPMorgan has only 0.6133 tonnes left in its registered or dealer inventory. (19,718.722 oz)  and only 863,683.63 oz in its customer (eligible) account or 26.86 tonnes

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 3 contract of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
To calculate the final total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (20) x 100 oz  or 2000 oz , to which we  add the difference between the open interest for the front month of September (140 contracts) minus the number of notices served upon today (3) x 100 oz   x 100 oz per contract equals the number of ounces standing.
Thus the initial standings for gold for the September contract month:
No of notices served so far (20) x 100 oz  or ounces + {OI for the front month (140)– the number of  notices served upon today (3) x 100 oz which equals 15,700 oz  standing  in this month of Sept (0.4883 tonnes of gold).
we lost 19 contracts or an additional 1900 oz will not stand in this non active delivery month of September.
Total dealer inventory 182,610.939 or 5.679 tonnes
Total gold inventory (dealer and customer) =7,034,438.943 or 218.80  tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 218.80 tonnes for a loss of 84 tonnes over that period.
And now for silver

September silver initial standings

September 11 2015:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  1,450,097.300oz

(CNT,Scotia, HSBC, Brinks)

Deposits to the Dealer Inventory 386,732.200 (CNT)
Deposits to the Customer Inventory 1,514,632.203 JPMorgan,CNT,Delaware,HSBC
No of oz served (contracts) 77 contracts  (385,000 oz)
No of oz to be served (notices) 468 contracts (2,340,000 oz)
Total monthly oz silver served (contracts) 1020 contracts (5,100,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 11,041,152.1 oz

Today, we had 1 deposit into the dealer account:

i) Into CNT:  386,732.200 oz

total dealer deposit; 386,732.200 oz

we had 0 dealer withdrawal:
total dealer withdrawal: 0  oz
We had 4 customer deposits:
 i) Into JPMorgan: 698,012.413
ii) Into CNT:  213,977.37 oz
iii) Into Delaware: 1902.25  oz
iv) Into HSBC; 600,740.17 oz

total customer deposits: 1,514,632.203 oz

We had 4 customer withdrawals:
ii) Out of CNT:  1,182,165.93 oz
iii) Out of Scotia: 70,032.62 oz
iii) Out of HSBC: 10,220.200 oz
iv) Out of Brinks: 187,678.550 oz

total withdrawals from customer: 1,450,097.300   oz

we had  1  adjustment
 i) Out of CNT:
we had a withdrawal of 598,068.82 oz from the dealer and this entered the customer account of CNT
Total dealer inventory: 50.415 million oz
Total of all silver inventory (dealer and customer) 166.413 million oz
The total number of notices filed today for the September contract month is represented by 77 contracts for 385,000 oz. To calculate the number of silver ounces that will stand for delivery in September, we take the total number of notices filed for the month so far at (1020) x 5,000 oz  = 5,100,000 oz to which we add the difference between the open interest for the front month of September (545) and the number of notices served upon today (77) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the September contract month:
1020 (notices served so far)x 5000 oz +( 545) { OI for front month of September ) -number of notices served upon today (77} x 5000 oz ,=7,440,000 oz of silver standing for the September contract month.
we lost 5 contracts or an additional 25,000 oz will not stand in this active delivery month of September.


The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.There is now evidence that the GLD and SLV are paper settling on the comex.***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:i) demand from paper gold shareholders ii) demand from the bankers who then redeem for gold to send this gold onto China
And now the Gold inventory at the GLD:
Sept 11/no changes in tonnage at the GLD/inventory rests at 678.18 tonnes
Sept 10. late last night, a huge withdrawal of 4.41 tonnes/this gold is no doubt heading towards Shanghai/Inventory 678.18 tonnes
Sept 9/2015: no changes in gold inventory at the GLD/rests tonight at 682.35 tonnes
Sept 8/ a slight withdrawal and this no doubt was to pay for fees/withdrawal of .24 tonnes/GLD inventory tonight at 682.35 tonnes
Sept 4/ again no changes in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
sept 3/no change in gold tonnage at the GLD/inventory rests at 682.59 tonnes.
Sept 2.2015: no change in gold tonnage at the GLD/inventory rests at 682.59 tonnes
Sept 1/2015: no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 31./no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 28.2015:/no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 27./ a huge addition of tonnage at the GLD to the tune of 1.49 tonnes/Inventory rests at 682.59 tonnes
Sept 11/2015 GLD : 678.18 tonnes

And now SLV:

Sept 11.2015: no changes in silver inventory at the SLV/inventory rests at 322.06 million oz

Sept 10.2015: we had no changes in silver inventory at the SLV/rests tonight at 322.06 million oz

Sept 9.2015:

we had another huge withdrawal of 1.336 million oz of silver from the vaults of the SLV/Inventory rests at 322.06 million oz

Sept 8/we had a huge withdrawal of 1.524 million oz of silver from the SLV/Inventory rests tonight at 323.396 million oz.

Sept 4.2015:no changes in inventory at the SLV/rests tonight at 324.923 million oz

sept 3/we had a small withdrawal of 140,000 oz of silver from the SLV/Inventory rests at 324.923 million oz

Sept 2:  we had a small withdrawal of 859,000 oz of silver from the SLV vaults/inventory rests tonight at 325.063 million oz

September 1/no change in inventory over at the SLV/Inventory rests tonight at 325.922 million oz

August 31.a huge addition of 954,000 oz were added to inventory today at the SLV/Inventory rests at 325.922 million oz

August 28.2015: no change in inventory at the SLV/Inventory rests tonight at 324.698 million oz

August change in inventory at the SLV/Inventory rests at 324.698 million oz

September 11/2015:  tonight inventory rests at 322.060 million oz
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 10.0 percent to NAV usa funds and Negative 9.4% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.3%
Percentage of fund in silver:37.4%
cash .3%( Sept 11/2015).
2. Sprott silver fund (PSLV): Premium to NAV rises to+.48%!!!! NAV (Sept 11/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .40% to NAV September 11/2015)
Note: Sprott silver trust back  into positive territory at +.48% Sprott physical gold trust is back into negative territory at -.40%Central fund of Canada’s is still in jail.

Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64) Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis. Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer. Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer. * * * * *

At 3:30 pm we receive the COT report which gives position levels of our major players:
First our Gold COT:


Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
182,753 110,068 47,590 146,865 215,953 377,208 373,611
Change from Prior Reporting Period
-7,140 -9,092 -5,426 -9,794 -3,342 -22,360 -17,860
119 111 92 44 53 206 219
Small Speculators  
Long Short Open Interest  
33,066 36,663 410,274  
480 -4,020 -21,880  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, September 01, 201
Our large specs:
Those large specs that have been long in gold pitched a huge 7140 contracts from their long side.
Those large specs that have been short in gold covered a huge 9092 contracts from their short side.
Our commercials:
Those commercials that have been long in gold pitched a huge 9794
contracts from their long side.
Those commercials that have been short in gold covered 3342 contracts from their short side.
Our small specs: (probably a little dazed)
Those small specs who have been long in gold added 480 contracts to their long side
Those small specs who have been short in gold covered 4020 contracts from their short side.
Conclusion: bearish as commercials go net short by 6432 contracts.
And now for silver:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
57,866 40,394 15,074 63,067 85,633
-821 -2,735 148 -8,115 -9,519
85 55 40 41 38
Small Speculators Open Interest Total
Long Short 157,013 Long Short
21,006 15,912 136,007 141,101
-1,442 1,876 -10,230 -8,788 -12,106
non reportable positions Positions as of: 143 119
Tuesday, September 01, 2015
Our large specs:
Those large specs that have been long in silver pitched 821 contracts from their long side.
Those large specs that have been short in silver covered 2735 contracts from their short side.
Our commercials;
Those commercials that have been long in silver pitched 8115 contracts from their long side.
Those commercials that have been short in silver covered a gigantic 9519 contracts from their short side.
Our small specs:
Those small specs that have been long in silver pitched 1442 contracts from their long side.
Those small specs that have been short in silver added 1876 contracts to their short side.
commercials go net long by 1404 contracts so this is supposedly bullish.
And now for your overnight trading in gold and silver plus stories on gold and silver issues:

(courtesy/Mark O’Byrne/Goldcore)

Cash Withdrawal Limits and “Bank Holidays” Coming?

Cash Withdrawal Limits and “Bank Holidays” Coming

  • Concerns that next crisis may be imminent
  • Bail-ins, withdrawal limits and negative interest rates may be imposed
  • FT proposes a ban on “barbarous relic” cash
  • Central banks would have people “completely under their control” – Bonner
  • Gold in safe jurisdictions will again protect wealth

Collapsing commodities prices, erratic market turmoil and the bursting of Chinese bubbles are leading to a crisis in confidence in the economic system across the globe. The long-expected crisis to which the global financial and systemic crisis in 2008 may have been a mere prelude may be upon us.


Governments have no appetite for further bailouts. The EU states have passed legislation which will make the banks or rather unfortunate and unsuspecting depositors liable for the bank’s lending and speculative profligacy.

It is claimed that this is to “protect” the taxpayer. In reality it will likely lead to bail-ins – the confiscation of deposits. It is likely that that in a crisis within the banking system this bail-in mechanism would be imposed on an impromptu “bank holiday”  followed by limits on cash withdrawals as were applied in Cyprus and more recently to depositors in Greece.

As has been pointed out by many other analysts, the unelected powers-that-be have used all their conventional weaponry to stave off the consequences of their irresponsible ultra loose monetary policies and massive buildup of debt globally – the largest ever seen in the history of the world.

Global Debt Levels since 2000

The typical response to a crisis has been to slash rates from somewhere around 6% – the historic post war norm in the west – to between 0% and 1%. This has stored up an even crisis in the future – the question is not if we have another crisis but when.

With interest rates now near zero, rates cannot be slashed any further. Unless of course, further “unconventional” weaponry are deployed upon the citizens to encourage them to spend. Further QE and QE$ is likely. Another option is negative rates – where depositors are charged by banks to hold their money. Both constitute weapons of financial and monetary repression in the deepening “war on cash.”

Bail-ins, withdrawal limits and negative interest rates would provoke a wave of withdrawals, further undermining the banking system – as was seen in Greece.

Hence, the deep concern when the Financial Times recently proposed abolishing cash altogether.

In a piece entitled The Case for Retiring Another ‘Barbarous Relic the FT laments the existence of cash. In the view of the editorial, cash limits the capacity of omniscient central banks to bully savers into parting with the fruits of their own labour to “stimulate” debt laden economies.

“The worry is that people will change their deposits for cash if a central bank moves rates into negative territory.”

Harbingers of Economic Totalitarianism


Armstrong Economics

Bill Bonner from Bonner and Partners has written an excellent piece on what the proposed ban on cash fully implies. He explains how such a move could have Orwellian consequences. The central bank, not to mention individual accounts, he writes,“will have you completely under their control”.

“You will buy when and what they want you to buy. You will be forced to keep your money in a bank – a bank controlled, of course, by the feds. You will say that you have ‘cash in the bank,’ but it won’t be true. All you will have is a credit against the bank. (Bank deposits are nothing more than IOUs from your bank to you.)”

He continues:

“You will be completely surrounded. If the feds want to force you to spend… or invest… your money, they will simply impose a ‘negative interest rate.’ They will do this by simply imposing a fee, or tax, on deposits greater than the interest rate you receive on your savings.”

During a financial crisis following a ban on cash Bonner writes:

“You will be locked into a bank account with a bankrupt institution. And the feds and their bank cronies will tell you when and how you can have access to your own money.”

Bonner also suggests that there may then be an attempt to prevent the sale of gold bullion coins and bars to the public in a desperate attempt at neutralising its qualities as a store of wealth and safe haven money.

One cannot have a free market or a free society if citizens are banned from choosing which form of money and which form of payment they choose to use. Such economic totalitarianism is liable to further erode trust in the financial system and actually contribute to runs on banks. Exactly the opposite effect that the proponents of the cashless society claim to be trying to avoid.

Fostering dependence on irresponsible banks and a still very vulnerable banking sector will make the entire western financial and economic system even more vulnerable.

Forcing entire nations to use electronic currency also seems imprudent at a time when electronic magnetic pulse warfare may be a key weapon of choice of terrorists and powerful state actors. Electric grids could be disabled for periods of time – rendering all commerce impossible in a cashless society.

Without electricity and computer or internet access, one could not access your current and savings account or make electronic payments.

Fostering absolute dependence and giving banks an even more entrenched and powerful monopoly over the issuance of credit and control of citizens savings and spending is a recipe for economic disaster. This is especially the case in an age of cyber warfare when banks have already been shown to be vulnerable to hacking.

The current drive towards a cashless society shows the importance of being diversified and not having all your savings and assets within the vulnerable financial and banking system.

It underlines the importance of having direct ownership of some of your wealth – be that cash or gold bullion in a safe deposit box or bullion coins and bars in the safest vaults, in the safest jurisdictions in the world.

Today’s Gold Prices:  USD 1106.35, EUR 980.85 and GBP 716.87 per ounce.
Yesterday’s Gold Prices: USD 1107.75, EUR 989.73 and GBP 720.32 per ounce.

Gold rose 0.7% on the COMEX yesterday and rebounded from a one month low. The most active gold contract for December delivery gained $7.30, or nearly 0.7 percent, to settle at $1,109.30 per ounce. Gold rebounded on what appears to have  been short covering and a bit of safe haven buying.

Gold in USD - 1 Week

Gold in USD – 1 Week

Falling European equities indices likely supported gold and gave a safe haven bid. Yesterday, the FTSE 100 Index, fell 1.2 percent, while French stock market benchmark index CAC 40 was also down 1.46 percent. Asian share were mixed but mostly marginally down overnight and European shares are marginally lower again this morning.

Gold in Singapore was marginally lower and in early European trading gold remained under pressure. Silver, platinum and palladium are all also a bit weaker, with palladium the biggest faller, down 1.2% today.

Still gold is currently set for a third straight week of marginal losses. Unless, we rally sharply before the end of the day, gold is set for a 1.2% fall this week. Silver conversely is higher this  week and is up nearly 1%.

Palladium, which Russia has a near monopoly in terms of production,  is outperforming, however, on a weekly basis, with a gain of 1.6% this week. Platinum’s down 1.2% for the week.

Global demand for coins and bars remains robust and this is especially the case in China. One such indication of that demand is that yesterday, the Hong Kong CME contract saw the highest daily withdrawals of gold kilo bars from the exchange at 19.178 tonnes.

Comex Hong Kong Gold KG Withdrawal

Another indication is the massive Chinese gold bullion imports from the United Kingdom have seen a significant uptick this year. In the first half of 2015 they are at a whopping 112 tonnes, compared to 110 tonnes for the full year in 2014.

This very significant increase likely reflects increased official Chinese demand. The PBOC is continuing to build its gold reserves in a bid to rival the near 8,500 metric tonnes that the U.S. is believed to have. The PBOC announced another increase to their reserves this week and they now stand at 1,693 metric tonnes – less than 20% of the reputed U.S.’ reserves.

Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk.

The Middle East is increasingly volatile and we appear to on the brink of a war in the region. This comes at a time of deep tensions with an increasingly assertive Russia.

Geopolitical risk remains high given increasing chaos in much of the Middle East and rising tensions between NATO and Russia. Russian forces have joined military operations supporting government troops in Syria, Reuters reports and today come reports from media in Israel that Iranian troops have joined their Russian counterparts.

Turkish warplanes bombed Kurdistan Workers Party (PKK) targets in northern Iraq overnight, a security source told Reuters this morning. This is the latest in a series of daily air strikes on the militants as conflict surges in southeast Turkey, Iraq and much of the Middle East.

A further deterioration in the situation in the Middle East including western powers bombing Syria and a likely Russian military response – would likely lead to a sharp escalation in safe haven gold buying.

There is also the ongoing risk of terrorism. Were ISIS to launch a terrorist spectacular on western soil, it could be expected to come on the anniversary of September 11th, 2001. The ‘911’ anniversary is today.

Given the confluence of still elevated geopolitical, systemic and monetary risks,  we are bullish as we enter the seasonal ‘sweet spot’ for gold in the autumn period prior to Indian festivals and Chinese New Year.

Gold looks to be in the process of bottoming and while the technicals remain quite weak, the fundamentals – of an uncertain global economy, volatile and vulnerable stock markets and robust global demand for gold, particularly from China – are quite positive.


Gold snaps a 10-session string of losses – MarketWatch
“Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk” – MarketWatch
Gold and Oil Back in Favor as Commodity Funds See First Flows in 6 Months – Bloomberg
LME says in talks on launch of precious metals derivatives – Reuters
Iranian troops join Russians in Syria fighting – Yedioth Internet


(courtesy zero hedge on today’s raid)

It’s Precious Metals Pummeling Time

On heavy volume, it appears someone once again decided that 9amET was the perfect time to dump paper gold and silver on the futures market…


Having peaked after 830’s PPI print, then tumble at 900ET, then flush at US open…


Perfectly normal and unrigged.

Dave Kranzler/IRD
Please note the huge 19 tonnes of physical gold demanded and removed daily from the SGE.  This gold has to come from somewhere…
It also explains why London is in backwardation and so in silver:
(courtesy Dave Kranzler IRD)

From Dystopia To Armegeddon

When the going gets weird, the weird turn pro.  – Hunter S. Thompson

I mentioned the news reports of fist-fights breaking out at traffic intersections in Denver. Then yesterday I hear two different news reports of random gun shots.  One of shots fired into someone’s house in a not so great part of Denver (Aurora).  The second report of bullets flying across one of Denver’s busiest highways and hitting cars.  Then I learn last night that bullets flying into cars driving on highways in Arizona have become part of everyone’s daily routine.

We’re sliding into the “Mad Max” scenario which many of us for a long time have envisioned eventually hitting this country.  I would have thought that this environment would have started engulfing this country in 2008.  But the Government pulled what appeared to be a rabbit out of its hat which enabled it to kick “Mad Max” down the road for a bit.  That “rabbit” by the way, while preventing an all out collapse and actually making life better for the people closest to the money spigot, was nothing more than a disguise designed to help the elitists confiscate even more wealth from the middle class.

The population’s hatred for the Government grows stronger by the day.  The popularity of Trump’s candidacy for President is a reflection of this intensifying despise.   A growing segment of the population cheers harder for Trump everyday as he lashes out with insults at the politicians everyone now hates.  Let’s be honest, Trump is at least as corrupt as the career politicians he’s humorously defacing.  He would be a horrible President.  Of course, so would every other candidate on the roster for both Parties.

Perhaps the best – yet least understood – evidence of the darkness which is slowly engulfing the the U.S. is the disappearance of physical precious metals from the global financial system.   Gold and silver is being removed hand-over-fist from public view.  Most of the gold is being moved from west to east, where it’s being removed from the bullion exchanges by the 10’s of tonnes on a daily basis.  For instance, theHong Kong Metals Exchange just had its largest daily withdrawal – 19.7 tonnes – in its history.   Roughly 100 tonnes per week is now being removed from the Shanghai Gold Exchange.  This is Gresham’s Law in action, folks.

We already know about the growing shortages for minted silver products around the world, especially in the U.S.   And the disappearance of gold from the Comex bank vaults is nothing short of stunning.  The ratio of fraudulent paper gold to deliverable physical gold hit 229:1 to yesterday.  To say this is “silly” is an insult to the word “silly.”  This reflects and epitomizes the extreme degree of corruption, fraud and theft which is burying the United States.

I was exchanging emails this morning with GATA’s Bill “Midas” Murphy.  We were marveling at just how extreme and blatant the manipulation of the precious metals market has become.  I find it beyond amusing that mainstream financial media – which rolls out charts of stocks and select commodities all day long – has failed to put on display the chart that shows that gold gets hit 90% of the time only when the Comex floor trading is open.  Funny non-coincidence, that.

I suggested to Bill that something really bad is going to hit our system:

Think about the manipulation of the metals market that occurred just before the Lehman, AIG/Goldman collapses. They took silver from $21 in March that year to $7 by late October.

Now think about how much more brutal this manipulation is both in the context both of the intensity and the disappearance of physical metal from the system.

I’d estimate that the manipulation now is probably 5x worse and more blatant than in 2008. Which means whatever is going to hit the system will be at least 5x worse than 2008.

I know most people who understand what is going on would like to see a collapse and thorough flush of the system.  Unfortunately, the dystopic behavior starting to show up in the general population will be met with brutal force by the near-totalitarian U.S. Government in an attempt to control it.   The inevitable systemic collapse will enable the Government to impose totalitarian control on the country to a degree that would be heartily admired by history’s despots.

It’s going to start to get really weird in this country (as if it has gotten weird enough already)…




(courtesy Jessie/Americain cafe)


11 September 2015


Comex Hong Kong Sees Biggest Daily Gold Withdrawal at 19.17 Tonnes – Mr. Float Goes to Asia


In Hong Kong when you buy gold and take it out of the exchange warehouses it is called a withdrawal.

In other words, you do something with your bullion besides letting it sit around in some exchange warehouse to be passed around and hypothecated 230 times.

The other day at the Hong Kong Comex Metals Exchange 19.17 tonnes of .999 gold kilobars were taken out.

That is about 616,329 troy ounces. Taken out by buyers in a single day. That is a new record for the young exchange.

I hear they have quite a few over-the-counter dealers now, whose mission it is to facilitate the offtake of physical bullion.

Maybe that is why the Comex Hong Kong exchange trading volumes are so low, but the physical offtake levels are so high. They are serious about their business.

Not bad but still not as much as Shanghai does, overall. See the second chart.

It is almost like the New York – London float of unencumbered gold bullion available for delivery is— melting away.




(courtesy Reuters)

Citi shared central bank trading info with clients, former trader says


By Jamie McGeever
Thursday, September 10, 2015

LONDON — Citigroup sent details of its central bank customers’ trading activity to another client and handed out details of its foreign exchange order book to customers in electronic chat rooms, a former foreign exchange trader said in a witness statement to a London court today.

Perry Stimpson, a former Citigroup currency trader who is claiming unfair dismissal, said the practices, which breached client confidentiality, were well known by senior managers.

“Our Investor Desk would comply with a weekly request from (a client) for details of central bank activity that Citi had transacted,” Stimpson said in his witness statement to an employment tribunal in London. Stimpson did not specify which central banks he was referring to. …

… For the remainder of the report:…



Now the banks have settled on price fixing for credit default swaps.

I believe that we have only one area left to go and that is price fixing on gold and silver

(courtesy Stempel/Reuters)

Big banks in $1.87 billion swaps price-fixing settlement


By Jonathan Stempel
Friday, September 11, 2015

NEW YORK — Twelve major banks have reached a $1.865 billion settlement to resolve investor claims that they conspired to fix prices and restrain competition in the roughly $16 trillion market for credit default swaps, a lawyer for the investors said today.

The settlement in principle was disclosed at a hearing before U.S. District Judge Denise Cote in Manhattan.

Daniel Brockett, the lawyer for the investors, said Cote gave both sides two weeks to iron out details, before submitting a settlement for her preliminary approval.

The defendants include Bank of America Corp., Barclays, BNP Paribas, Citigroup, Credit Suisse Group, Deutsche Bank, Goldman Sachs Group, HSBC Holdings, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland Group, and UBS. …

… For the remainder of the report:


We must watch what happens with Glencore.  These guys are a large base metal operations who went ballistic on purchases of mines as they thought that inflation was the name of the game and commodity prices would rise.  They debt to equity is 4.0 to one.  On Labour day weekend, they announced their 10 billion USA doomsday plan for recovery and initially the market was happy.  Also remember that these guys our huge traders of commodities and a rise in interest rates would be a death knell to them, similar as to what happened with AIG and their trading desk.  Today Moody’s has come out and stated and their plan is not enough and the result:  CDS’s rose again.

This is dangerous and worth noting..


(courtesy zero hedge)

Glencore’s “Doomsday” Plan Disappoints As CDS Resumes Rise; Question Emerges: “What Happens If Company Fails”

While the US was still sleeping on its Labor Day holiday, the global commodity world was stunned on Monday when Glencore’s CEO Ivan Glasenberg – formerly a perpetual optimist in all things commodity – announced a dramatic recapitalization plan, one which would see it not only scramble to raise $10 billion in capital through an equity offering, asset sale and capex cut, but become the first major copper supplier of scale to cut production, thereby defecting from the game theoretical “race to the bottom” equilibrium, and indirectly benefiting its biggest competitors. The reason: prepare for a “doomsday” scenario for commodity prices.

Glencore’s unprecedented action was in direct response to an S&P downgrade warnings from the previous week, which threatened to strip the world’s biggest commodity trader of its critical investment grade, BBB rating, which would have dramatic and adverse consequences on the company’s trading operations: thing an AIG-like collateral waterfall. The S&P warning is also why last week the company’s CDS blew out all the way to 450 bps, the widest since the financial crisis.


Then, as a result of the capital raise, one which many took for admission the company would aggressively focus on lowering its net leverage to a far more reasonable for the current commodity bear market 2.0x target, Glencore’s CDS tumbled by nearly a third in the past 4 days.

And then, something bad happened: the other rating agency, Moody’s, agreed with us when we said that Glencore’s deleveraging efforts may fall well short of the market, and put the outlook for Glencore’s credit rating of Baa2, just a fraction above junk, on negative watch.

Why was the news particularly bad? Because Moody’s confirmed that Glencore’s doomsday scenario may not be “doom” enough. From the report:

The measures that Glencore announced on 7 September 2015 will help strengthen and stabilise Glencore’s credit profile when completed, however their scale reflects not just the challenges of the current commodity market, but also the growing possibility of a prolonged weaker pricing environment. On 28 August Moody’s revised downwards its forecast for GDP growth in the G20 economies, reflecting the impact of a more marked slowdown in China and more prolonged negative effects from low commodity prices, with slower growth in China making a significant rebound in commodity prices in the near term unlikely.


The company proposed a $2.5 billion fully-underwritten equity issuance, announced a suspension of 2015 final dividend ($1.6 billion) and 2016 interim dividend ($0.8 billion) to be paid in 2016, and identified additional measures to raise about $5.3 billion in cash proceeds from further capex cuts, the sale of various non-core assets, as well as further release of working capital by the end of 2016.


The affirmation of the Baa2/P-2 ratings reflects our view that the proposed measures will allow Glencore to build sufficient financial flexibility and strengthen its credit profile. The Baa2 rating is underpinned by the expectation that the company will redeploy capital and reduce gross debt to restore its leverage metrics closer in line with the Baa2 rating guidance, including gross adjusted debt/EBITDA at around 3.5x times in the next 12 months, from the approximately 4x times debt/EBITDA level that we project at the end of 2015 (prior to any gross debt repayment in 2H 2015). It also factors our projection that Glencore will continue to generate free cash flow over the next 6-12 months, on the back of CAPEX cuts and working capital inflow, and will further add to its solid liquidity position in the operating environment that we expect to remain challenging.

What would catalyze a downgrade? “The ratings could be downgraded if debt/EBITDA remains persistently higher than 3.5x” which also confirms what we said several weeks ago: it is all about the Glencore cash flows, which in the current depressed environment and mothballing of two Glencore mines, will drop precipitously in the coming months.

And then there was the biggest kicker of all: copper prices. To wit: “Notwithstanding the company’s broad capabilities to take strengthening measures, Moody’s has changed the outlook to negative to reflect the scope for a prolonged difficult market that may cause a slower recovery in Glencore’s financial profile,particularly if copper prices were to decline to below $2.2/lb on a prolonged basis from Moody’s current copper price assumption of $ 2.35/lb for 2016.

As a reminder, the reason why we said back in March 2014 that going long Glencore CDS is the best trade to hedge against a Chinese collapse, is precisely due to Glencore’s underappreciated sensitivity to copper prices…

… which have since tumbled, and led to the recent surge in not only GLEN CDS but the record drop in its stock price.

What Moody’s did with its warning after Glencore’s deleveraging action announcement is to confirm ourconclusion from Monday:

as a result of today’s asset-stripping and equity-raising activity, Glencore is now a that much better levered bet on China’s economy in a broad sense, and copper pricing in a narrow one. In fact, with every passing week that neither China’s economy rebound nor copper reverses recent losses, expect GLEN CDS to accelerate its widening once again, and overtake its recent multi-year high level of 445 bps in very short notice.

Sure enough, as of this morning GLEN CDS was up over 30 basis point, and has regained one-fifth of the recent drop on the capital raise.

The worst news for Glasenberg is that at least one rating agency demands to be “shown” just how effective the company’s capital raise will be instead of merely being “told.” Which means that as we said on Monday of this week, as of this moment Glencore is an even better and more levered bet on not only copper, but China.

Finally, some have started to ask: what happens if Glencore were to fail? Well, since Glencore is not just a miner, but probably the world’s largest commodity trading desk, and is a key commodity counterparty for everyone, the answer is simple: Lehman… only this time in the commodity space.

And now your overnight Friday morning trading in bourses, currencies, and interest rates from Europe and Asia:

1 Chinese yuan vs USA dollar/yuan rises in value, this  time at   6.3747/Shanghai bourse: slightly in the green and Hang Sang: red

2 Nikkei down 35.40   or 0.19.%

3. Europe stocks all in the red      /USA dollar index up to  95.65/Euro down to 1.1257

3b Japan 10 year bond yield: falls to .354% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.60

3c Nikkei now just above 18,000

3d USA/Yen rate now well above the important 120 barrier this morning

3e WTI:  44.73 and Brent:  47.74

3f Gold down  /Yen up

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil down for WTI and down for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises  to .685 per cent. German bunds in negative yields from 4 years out

 Greece  sees its 2 year rate rises to 10.75%/Greek stocks this morning down by 0.72%:  still expect continual bank runs on Greek banks /

3j Greek 10 year bond yield rises to  : 8.65%  

3k Gold at $1106.75 /silver $14.58  (8 am est)

3l USA vs Russian rouble; (Russian rouble down 4/10 in  roubles/dollar) 68.12,

3m oil into the 44 dollar handle for WTI and 47 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar.

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9773 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1003 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 4 year German bund now enters in negative territory with the 10 year moving further from  negativity to +.685%

3s The ELA lowers to  89.1 billion euros, a reduction of .6 billion euros for Greece.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes again and agrees to more austerity even though 79% of the populace are against.

4. USA 10 year treasury bond at 2.20% early this morning. Thirty year rate below 3% at 2.96% / yield curve flatten/foreshadowing recession.

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

Futures Drift Lower In Surprisingly Uneventful Overnight Session

Perhaps after intervening every single day in the past week (remember that FT piece saying the PBOC would no longer directly buy stocks… good times) in either the stock or the FX (both on and offshore) market, China needed a day off; perhaps even the algos got tired of constantly spoofing the E-mini and inciting momentum ignition, but for whatever reason the overnight session has been oddly uneventful, with no ES halts so far, few USDJPY surges (then again those come just before the US open), and even less violent CNY or CNH moves, leading to virtually unchanged markets in Japan (small red) and China (small green). And while the initial tone in Europe has been modestly “risk off”, it is nothing in comparison to the massive gyrations that have become a stape in the past few weeks.

Asian equity markets traded mixed with price action relatively subdued amid light news flow and lack of key data with participants remaining tentative ahead of next week’s FOMC meeting and Chinese industry data over the weekend. As such, the Nikkei 225 (-0.2%) and ASX 200 (-0.5%) traded with losses with little in the way of new macro newsflow. Elsewhere, Chinese markets traded mixed through most of the session before falling as European participants got to their desks with the Hang Seng (-0.3%) initially benefitting from strength in tech names in a continuation of the move seen in the US before closing in the red. JGBs traded mildly lower despite the mixed risk outlook in Asia, while the BoJ also entered the market to buy JPY 870 bn government bonds in the short end.

The BoK kept the 7-day repo rate unchanged at 1.50% as expected, with BoK Governor Lee adding that the current rate is at a level capable of supporting the South Korean economy. Moments ago, the Russian central bank joined the “unch” category when it left its key rate at 11.00%, as expected.

In Europe, participants kicked off the final European session of the week amid a bout of risk off sentiment, with equities (Euro Stoxx: -0.90%) falling into the red shortly after the open. Despite opening modestly in the green, equities have spent the majority of the session in the red, despite light macro news. On a sector specific basis, telecom names are the notable underperformers after Teliasonera (TLSN SS) (-1.2%) and Telenor (TEL NO) (-1.4%) announced a withdrawal from merger in Denmark, citing disagreements with the European Commission.

The IBEX 35 (-0.9%) continues to underperform after experiencing weakness throughout the early part of September as market participants react to the upcoming Catalan election, with the majority of pro-independence groupings joining forces and suggesting that if they get a majority of seats they will declare unilateral independence, even if they do not win the majority of votes. Perhaps as a result the SP/GE 10y bond yield spread is also wider amid the heightened risk off sentiment, while T-notes and Bunds both reside in positive territory, benefitting from weakness in equities .

The risk off sentiment has also filtered through to FX markets with EUR and JPY benefiting from a safe-haven bid and as such EUR/USD briefly broke above 1.1300 to the upside, with the USD/JPY trading down to the 120.50 level, which in turn has weighed on the USD, with the USD-index (-0.1%) residing in modest negative territory heading into the North American crossover. This however was promptly followed by a round of SNB intervention, which pushed the EURCHF to above 1.10, the highest level since the January 2015 de-pegging.

Of note FOMC related risks are beginning to be evident in FX options market, where the 1-w tenor is up nearly 400bps at its highest level since mid-July. Furthermore, commodity currencies have weakened alongside the softness in commodity complex, with the likes of CAD, RUB and NOK all seeing further weakness today.

In commodities, softness has been seen in both the metals and energy complex today, with the latter falling after a bearish note from Goldman Sachs on the sector (more shortly). As such, WTI and Brent crude futures have broken below the USD 45 and USD 48 levels respectively, which comes in the context of Saudi Arabia downplaying the need for an additional summit to discuss price stability in the energy market yesterday.

Of note for the metals complex gold is on course for its 3rd consecutive weekly decline as participant remain cautious heading into next week’s highly awaited, key-risk FOMC meeting. While copper prices remain on track for its biggest weekly gain since May following recent announcement of output cuts by large industry names and Dalian iron ore futures are looking at the largest weekly gain in over a month.

IEA forecasts that oil supply outside of OPEC is to fall the most since 1992 and raises its 2015 and 2016 world oil demand estimate by 200kbpd. OPEC August supply down 220kbpd to 31.57m1n, linked to Saudi and Iraq production.  Earlier in the week, US E1A reduced their 2015 and 2016 world oil demand growth forecast by 90K bpd to 1.17mln bpd and 150K bpd to 1.31m1n bpd respectively.

To summarise: Europe’s Stoxx 600 falls 0.8% as of 12:30pm CET, with a selloff in telecoms after Telenor, Teliasonera scrapped plans to merge business units in Denmark amid EU opposition. Brent falls again on glut; Goldman cuts forecasts. EUR/CHF rises above 1.10, eyes move to 1.1140 on technicals. V2X falls back, down 0.2% at 31.9, despite retreat in equities

Key events on the US calendat today’s include US PPI (8:30am) and the preliminary reading of University of Michgan sentiment (10:00a,) as well as the monthly budget statement at 2pm which remains the only place to keep a track of just how big the total US debt burden is since the official number hasn’t been updated in almost a year.

Market Wrap:

  • Telecom sector -1.9%, volumes 156% 30-day avg. vol. after TeliaSonera, Telenor Scrap Danish Merger Amid EU Opposition
  • Brent Futures down 2.1% at $47.89.1/bbl
  • LME 3m Copper down 1.1% at $5338/MT
  • Euro down 0.13% at $1.1266
  • S&P 500 futures down 0.3% at 1933.8
  • Indexes: FTSE 100 down -0.2%, CAC 40 down -0.7%, DAX down 0.8%, IBEX 35 down -0.9%, FTSE MIB down -0.3%, Euro Stoxx 50 down -0.7%
  • 17 out of 19 Stoxx 600 sectors fall; only basic resources, energy sectors gain ground, up 1.5%, 0.3% respectively
  • Daimler Says Brazil Truck, Bus Mkt to fall 40%-50%
  • IEA Sees U.S. Shale Oil Output Falling on Price Slump
  • Oil at $20 Possible for Goldman as Forecasts Cut on Glut
  • Goldman raises view on oil sector to neutral, adds Total to conviction buy list
  • No consensus seen on Wall St on timing for Fed rate hike
  • Catalan National Day Signals Election Risks Ahead

Overnight Media Digest from Bloomberg and RanSquawk

  • Participants have kicked off the final European session of the week amid a bout of risk off sentiment, with equities falling into the red shortly after the open
  • The risk off sentiment has also filtered through to FX markets with EUR and JPY benefiting from a safe-haven bid and as such EUR/USD has now broken above 1.1300 to the upside and USD/JPY trades around the 120.50 level
  • Today’s highlights include US PPI final demand and the preliminary reading of University of Michgan sentiment as well as comments from BoE’s Forbes
  • Treasuries 5Y and longer rise, paring weekly gains, amid losses in stocks and oil; market focused on next week’s Fed meeting and possibility of first rate hike since 2006.
  • As FOMC considers 1st rate increase since June 2006, yrs of central bank transparency have left many wondering if monetary policy’s goalposts are shifting once again, and confused over what will move liftoff forward
  • Goldman cuts 2015 WTI forecast to $48.10/bbl from previous est. of $52/bbl, 2015 Brent forecast cut to $53.70/bbl from $58.20/bbl; potential for oil to fall to production costs of $20/bbl is becoming greater, bank said in a report
  • Aggregate financing in China rose to CNY1.08t ($169.5 billion) in August, from CNY718.8b in July, according to a PBOC report Thursday that matched the estimate for CNY1t in a survey of economists
  • EU governments are likely to agree in principle to shelter 160,000 refugees from crisis zones in the Middle East and Africa, an EU official said
  • Sovereign 10Y bond yields mostly lower. Asian and European stocks fall, U.S. equity- index futures decline. Crude oil, gold and copper lower


DB’s Jim Reid concludes the overnight recap

Markets feel on edge at the moment with the looming FOMC meeting next week creating an air of unease and a lack of conviction, particularly in equities. Yesterday we saw a near mirror image of Wednesday with large losses in Asia (Nikkei -2.51%, Shanghai Comp -1.39%) followed up by across the board declines in Europe (Stoxx 600 -1.22%, DAX -0.90%). Modest gains were made in the US however having initially opened up a tad soft, although a 0.7% decline off the intraday highs for the S&P 500 into the close highlighted the current volatility and uncertainty, with the S&P 500 eventually closing up +0.53%.

More on yesterday’s moves in a bit. But firstly to Asia where it’s been a fairly mixed morning across equity markets. Bourses in China have been choppy once again, with the Shanghai Comp erasing a near 1% gain into the midday break to now be little changed (-0.07%). It’s been a weaker session for the CSI 300 (-0.15%) although the Hang Seng has had a decent session, currently up 0.86%. Elsewhere we’ve seen a leg lower in the Kospi (-0.76%) while the Nikkei and ASX are flat.

Much of the focus this morning has been on how the offshore Yuan is trading after a 1.22% rally yesterday – the biggest appreciation since August 2010 with chatter of domestic state bank buying. The currency has followed up this morning by trading a tad weaker, down 0.20% as we type while the onshore Yuan is little changed. Elsewhere, S&P 500 futures are pointing to a slightly better start, up half a percent while there has been little change in the Oil complex.

Back to yesterday’s highlights. On a light day for volumes (where S&P 500 volumes were down nearly 10% versus the 30-day average), a rebound in tech stocks, supported by a bounce back for Apple in particular seemed to be the catalyst for much of yesterday’s gains for US equities. A better day in the Oil complex also helped support some of the rise with energy stocks having a decent session. That comes following a +4.01% and +2.75% bounce for WTI and Brent respectively and helped by the latest crude production data from the EIA which showed production fell by 83k barrels a day last week to the lowest since January. That seemingly offset more bearish stockpiles data while the WSJ reported in a story last night that members of OPEC expect to prices to stay at current levels through the end of the year.

One market which has seemingly come alive in the last few days is the primary market for credit. In Europe yesterday we saw decent sized deals price from Apple and Royal Dutch Shell, triggering the busiest day for corporate bond sales in the region since February. Meanwhile over in the US a bumper deal from Biogen helped mark the third straight double-digit day of US$ issuers coming to the market and helping to take the weekly volume past the $50bn mark. Staying in the asset class, it was interesting to see that with Brazil’s rating downgrade on Wednesday night, a subsequent downgrade to Brazil’s state owned oil producer Petrobras means the corporate has now become the largest HY issuer (based on S&P ratings), with $56bn of bonds, which far overshadows ‘just’ the $31bn for US HY giant Sprint.

Also in high demand yesterday was the 30y Treasury auction which saw the bid-to-cover ratio of 2.54 easily top the 2.37 average of the previous six actions and follows on from decent demand seen at the 10y and 3y auctions this week. 30y Treasury yields closed a choppy session 2.4bps higher in yield at 2.986% and the highest closing level since July 29th, while 10y yields finished up another couple of basis points at 2.223%. The data flow didn’t offer a whole lot of surprises and was slightly on the softer side if anything. The import price index printed lower than expected for August (-1.8% mom vs. -1.6% expected), dragging the annualized rate down nine-tenths to -11.4% yoy. There were below market prints also for wholesale inventories (-0.1% mom vs. +0.3% expected) and trade sales (-0.3% mom vs. +0.1% expected), although there was better news on the employment front as initial jobless claims fell 6k to 275k as expected.

We noted in yesterdays EMR that DB’s Joe Lavorgna had changed his Fed liftoff view from September to October, listing seven reasons why. Joe followed this up with a note last night listing the seven conditions that need to be met for a 25bp hike at the October meeting. Joe highlights that between now and then the following need to happen: 1) Global equity markets need to stabilize. 2) The Fed’s broad trade-weighted dollar index has to stop appreciating. 3) Key measures of economic activity such as housing starts, nonfarm payrolls and retail sales – variables that have been relatively strong – need to remain sturdy. 4) Core inflation has to stop going down. 5) Chair Yellen needs to repeat in her press conference that the October FOMC meeting is ‘live’. 6) Chair Yellen must repeat that the Fed has the ability to call an impromptu press conference to explain its action. 7) Most importantly, the financial markets have to be discounting a reasonably high probability of an interest rate hike. Should these conditions be met, Joe expects an October hike to be followed by two more 25bps increases at next year’s March and June meetings.

We’d highlight that the seventh condition in particular is of significant importance in light of markets still pricing just a 28% probability of a September move (well down from the 54% we saw back in early August). A tightening in policy would clearly be a slight surprise to markets right now and it would be hard to see the Fed going against the market. We continue to back our long standing call that a hike is unlikely this year and that QE4 will eventually happen in the US.

The Bank of England was also in focus yesterday, with Sterling well bid after the BoE minutes played down the recent turmoil in markets as altering their outlook. Keeping rates on hold after an 8-1 majority (with McCafferty the lone dissenter), the minutes stated that ‘global developments do not as yet appear sufficient to alter materially the central outlook described’ and ‘although the downside risks emanating from overseas had risen, it would be premature to draw strong inferences from this month’s events for the likely path of activity in the UK’.

Onto today’s calendar now. In Europe this morning the final August German CPI reading is due, along with UK construction output data. In the US this afternoon much of the focus will be on the August PPI print, while we’ll also get the preliminary September University of Michigan consumer sentiment print.


China trading at opening:  9:30 pm est Thursday/Friday morning 9:30 Shanghai
POBC fixes onshore yuan stronger and the offshore yuan rises again and coming very close to the onshore rate (differential rate only .0058).  Li also states that there will be no QE as their staple food pork surges in price.
(courtesy zero hedge)

China Fixes Yuan Stronger After Premier Li Says “No QE” Amid Record High, Surging Pork Prices

Despite the biggest intervention surge in offshore Yuan on record (“predatoring” any excess speculative fervor on PBOC actions in the spot market), a ‘PBOC Advisor’ noted that “long-term FX intervention was not their target.” The Hong Kong Dollar is pressuring the strong-end of its range against the USD, trapped between the USD peg and weak economy (like so many others). Chinese stocks continue to tread water asChina’s Premier Li rules out QE (perhaps becausepork prices are already at record high prices and are rising at a record pace), exclaiming that there “well be no hard landing,” but BofAML expected 50-100bps more RRR cuts this year. PBOC strengthened the Yuan Fix tonight (just modestly).

Despite this…


Offshore Yuan surged by the most on record overnight (removing all the devaluation premium)…


After last night’s major devaluation, PBOC strengthens Yuan:



And officials proudly crowed that…


And in other FX news:


China’s Premier ruled out Quantitative Easing since he implored thare will no hard landing.

He said during a speech at the World Economic Forum in Dalian on Thursday that quantitative easing alone could not solve structural problems in economic growth and that it would lead to negative and spillover effects.



Perhaps this is why…

But BofAML says forget Pork.. we need moar… (via ForexLive)

  • There is still room for one to two interest rate cuts (25bp each) in the rest of the year
  • But we believe the chance for aggressive rate cuts is very small, given rising CPI inflation and capital outflow pressures
  • Domestic liquidity has become tighter partly due to capital outflows and PBoC ‘ s FX intervention
  • We expect at least 50 – 100bp in RRR cuts in coming months to offset the liquidity drain
  • The PBoC will also likely use multiple tools … to flexibly manage domestic liquidity
  • Targeted credit support to key infrast ructure projects and SMEs are likely to expand

Two words – “Social Unrest”

*  *  *

Chinese stocks trod water overnight amid close-to-zero volume…


and are flat so far today:



Charts: Bloomberg



Iran is now sending soldiers to support Russian troops in Syria which has to be a major humiliation for Obama fresh off the signing of the oil deal.  This may signal that Israel may have to enter the fray as well!!

(courtesy zero hedge)

In Major Humiliation For Obama, Iran Sends Soldiers To Support Russian Troops In Syria

When Zero Hedge first reported ten days ago that Russian troops, in their bid to support the Assad regime in its ongoing confrontation with various ISIS, Al Nusra, and other US-supported groups in what has become the proxy war of 2015 (one which even comes with thousands of refugees for dramatic media impact) had been quietly massing in Syria and have set up a forward operating base near Damascus, there were those who were openly skeptical.

Then, just a few hours ago, Bloomberg finally confirmedthat “top officials were scheduled to meet at the National Security Council Deputies Committee level to discuss how to respond to the growing buildup of Russian military equipment and personnel in Latakia” and that Russia is “set to start flying combat missions from a new air base inside Syria.”

So yes, for whatever reason (and the reason as we explained is clear: natural gas pipelines) Russia is making not only its increasing support for Assad known, but also that it is in Syria and that any further US-funded and supported incursions by ISIS or whatever is the media scapegoat terrorist organization du jour, will not be tolerated.

To be sure, none of this is in any way a surprise to the US – just as the US is using ISIS as a pretext to invade or pressure any mid-east nation it desires “in order to hold the jihadist terrorist scourge”, so Russia is now using ISIS as a comparable excuse to intervene. After all, if ISIS is the friend of humanity, then surely Russian aid will be welcome. That it is not, had made it abundantly clear that not only is ISIS just a convenient diversion, but the reasons for a Syrian invasion and deposition of Assad, are purely political and entirely in the realm of real-politik. Also, Russia’s return to Syria in greater numbers is no surprise to anyone in the Pentagon – this was merely the long-awaited escalation of the foreplay that started when ISIS mysteriously emerged on the scene just over a year ago.

But in the latest twist in what we have been warning for months has the makings of the biggest proxy shooting war in years, one that will come as a major humiliation to the Obama administration, today we find out that none other than America’s most recent diplomatic sweetheart in the Gulf region, Iran, has deployed ground soldiers into Syria in the past few days in cooperation with Russia’s President Vladimir Putin.

This answers our question from earlier this week:

So as the coalition drives towards Sana’a – which the Saudi-owned al-Hayat newspaper says will be “liberated” after a “decisive battle” in Marib – and as Turkey, the US, Saudi Arabia, Jordan, and Qatar mull options for the final push to oust Assad in Syria, the only remaining question is whether Iran will remain on the sidelines and allow the Houthis to be routed and Assad deposed, or whether, like Moscow, Tehran finally decides that the time for rheotric has come to an end.


And on that note, we’ll close with thefollowing from AP: “Iran’s foreign minister on Monday criticized demands for the resignation of Syrian President Bashar Assad, saying such calls have prolonged the Arab country’s civil war. Mohammad Javad Zarif went so far as to say that those who have in the past years demanded Assad’s ouster “are responsible for the bloodshed in Syria.”

And so, Iran appears to have picked its side, and knowing that it has Obama wrapped around its finger as part of Obama’s huge “diplomatic coup” of restoring relations with Iran as part of the Nuclear Deal (since any backtracking would further embarrass the US president) and can pivot in any direction in the Syrian conflict, it has decided to side with Russia and Syria.

According to Ynet, a further said that the increased military involvement in Syria was “due to Assad’s crisis and under Russian-Iranian cooperation as a result of a meeting between Soleimani with Russian President Vladimir Putin.”

Where things get even more complicated, is that while Israel would do everything it can to turn public opinion against Iran, especially if it is now involved in the Syrian debacle, Israel still has cordial relations with Russia: “We have dialogue with Russia and we aren’t in the  middle of the Cold War,” said the source. “We have open channels with the Russians.”

So what does Iran joining the conflict really mean?  “It’s hard to forecast whether Russia’s presence will decide the fate of Syria, but it will lengthen the fighting and bloodletting for at least another year because ISIS won’t give up,” said the source.

In other words, unless even more foreign powers intervene, you know “to stop ISIS” by focusing all their firepower on attacking or defending Assad, the Syria conflict will drag on indefinitely with an unknown outcome. Which in turn begs the question: how long will Israel keep out of the war, and if it decides to join whether it be using one of the more traditional, false flag methods to enflame public opinion against Iran. Who will be collateral damage then.

One thing is certain: with the GOP unable to block the Iran nuclear deal in the Senate, should it emerge and be confirmed, that Iran is indeed present, then Obama will be faced with the biggest diplomatic headache in his administration’s history, namely the explanation of why he is scrambling to restore diplomatic connections with a regime that couldn’t even wait for the Iran deal to be formally passed before it turned its back on its newest “best friend” in the Oval Cabinet, and promptly side with the KGB agent who over the past two years has emerged as the biggest US enemy in three decades.

Furthermore, it also means that now Russia suddenly has the media leverage in its hands: a few “leaked” photos of Iran troops to the press and the phones in the US Department of State will explode.

But the most important news is that, as we warned previously, with every incremental party entering the Syria conflict, the probability of a non-violent outcome becomes increasingly negligible. And now that Iran is involved, it means that both Israel and Saudi Arabia will be dragged in, whether they like it or not.




The rhetoric between Washington and Moscow getting louder by the minute

(courtesy zero hedge)


“Be Our Guest”: Russia Warns Washington Of “Unintended Incidents” In Syria

On Thursday evening, we chronicled the latest in the drama that is Syria’s horrific civil war, noting that,according to an Israeli defense source, “hundreds” of Iran’s Revolutionary Guards are on the ground in Syria fighting alongside the Russians to support Bashar al-Assad’s depleted forces as they battle to regain control of the country.

If true, that would answer the following question which we’ve been asking for quite some time: will Iran remain on the sidelines and allow the Houthis to be routed in Yemen and Assad deposed in Syria, or will Tehran, like Moscow, finally decide that the time for rhetoric has come to an end?

Reports of Iranian involvement come on the heels of rampant speculation about the scope of Russia’s military buildup near Latakia where US “intelligence” and a series of unnamed “Lebanese sources” claim Moscow is essentially preparing for a full-on push to rout any and all domestic opposition to the Assad regime. The question, of course, is what happens when foreign opposition to the Assad regime isn’t willing to accept the restoration of the strongman’s rule.

Predictably, there’s been no shortage of back-and-forth banter between John Kerry and Sergei Lavrov over the past several days. Here’s how Lavrov characterizes the exchange:

“Kerry was also pushing the very strange idea that supporting Bashar Assad in his anti-terror fight only strengthens the positions of ISIS, because the sponsors of ISIS would pump even more arms and money into it,” Lavrov said.


“It’s an absolutely upside-down logic and yet another attempt to appease those who use terrorists to fight dissenting regimes,” the Russian FM said, mentioning US attempts to cooperate with varrious extremist groups in Syria over the past few years.


“It’s a colossal mistake that the US-led [anti-ISIS] coalition never considered interaction with Syria, not even information exchange,” Lavrov said. “I cannot comprehend this logic, or rather absolute lack of logic.”


“We help not only Syria, we also provide weapons to Iraq and other countries of the region that find themselves on the frontline with the terror threat. Equally for Iraq and other countries, we do so without any political preconditions,” Lavrov said.

And on Friday, Lavrov took it up a notch with a series of very serious-sounding (albeit hilariously overstated, we hope) soundbites delivered at a news conference in Russia. Here’s Reuters:

At a news conference, Foreign Minister Sergei Lavrov said Russia was sending equipment to help Assad fight Islamic State. Russian servicemen were in Syria, he said, primarily to help service that equipment and teach Syrian soldiers how to use it.


Russia was also conducting naval exercises in the eastern Mediterranean, he said, describing the drills as long-planned and staged in accordance with international law.


Lavrov blamed Washington for cutting off direct military-to-military communications between

Russia and NATO over the Ukraine crisis, saying such contacts were “important for the avoidance of undesired, unintended incidents”.


“We are always in favor of military people talking to each other in a professional way. They understand each other very well,” Lavrov said. “If, as (U.S. Secretary of State) John Kerry has said many times, the United States wants those channels frozen, then be our guest.”

Yes, “be our guest”, which, unless something is lost in translation there (as it was when Hillary Clintonhilariously presented Lavrov with a giant red button that was supposed to say “reset” but actually said “overcharged” in 2009) sounds quite a bit like the Kremlin telling Washington that it’s just fine with Russia if the West wants to risk getting into a scenario where Russian and US jets end up in an “accidental” dog fight in the skies above Syria.

We will now anxiously await Kerry’s response which will almost certainly contain the words “very” and “concerned”, which would be accurate as long as he’s talking about Assad’s fate and not the fate of ISIS.


I was waiting for this to happen;
(courtesy zero hedge)

It Begins: Europe Flooded With Reports Of “ISIS Terrorists” Posing As Refugees

While the US is looking back at the 14 year anniversary of what is widely accepted as the biggest terrorist event in modern US history, in Europe it is time to look forward to what may be the advent of domestic “terrorism” in the coming months, whether real or false flagged.

Earlier this week, one of our contributors Erico Tavares pointed out something disturbing, namely that in Europe’s perpetual search for “crises” on which to capitalize in its relentless encroachment to a European superstate, the current migrant crisis may be a blessing in disguise (assuming, of course, it wasn’t premeditated from day one as others have suggested).

Why blessing? Because just like the US Patriot Act which allowed a massive expansion of the US government apparatus while obliterating civil and privacy rights (highlighted earlier today), confirmed a decade later by Edward Snowden, was a regulation in search of a terrorist event, so Europe’s next superstate expansion will require a comparable anti-terrorism “rush” in which the population voluntarily hands Europe’s supra-government even more rights to centrally-plan as it sees fit.

Which means that as part of the refugee crisis in which tens of thousands of innocent Syrians have been displaced and seeking European asylum, it was only a matter of time before one or more was “found” to be ISIS terrorists in order to perpetuate the fear and crisis narrative. A crisis which Brussels would never go to waste.

That time has arrived following a report by German RTLand carried by NewObserver that “an ISIS terrorist posing as an “asylum seeker” has been arrested by German police in a “refugee” center in Stuttgart, and German customs officers have seized boxes containing Syrian passports being smuggled into Europe.”

So it begins.

According to RTL, the terrorist is a 21-year-old Moroccan using a “false identity” who had registered as an asylum seeker in the district of Ludwigsburg. He was identified after police linked him to a European arrest warrant issued by the Spanish authorities. He is accused of recruiting fighters for ISIS, where he acted as a contact person for fighters who wanted to travel to Syria or Iraq.

This arrest of the alleged bogus “asylum seeker” comes at the same time that a German finance ministry spokesman said that
“boxes” of fake Syrian passports, destined for sale and distribution to the hordes of nonwhite invaders seeking to settle in Europe as bogus “war refugees,” had been seized.”

That news, carried in a report by the German Tagespiegelnewspaper, also revealed that 10,000 fake Syrian passports were seized by police in Bulgaria, on their way to Germany.

The finance ministry official said both genuine and forged passports were in the packets intercepted in the post. Possession of these passports is a vital part of claiming “asylum” as “war refugees.”


The Tagespiegel also revealed that the fake Syrian passports are being sold for about $1,500 each—and the fact that many of the “refugees” can afford to buy multiple passports is yet another indication of the bogus nature of their claims to be “asylum seekers.”


Significantly, the Tagespiegel article continued, “It is not only Syrians who are interested in Syrian passports. Refugees from Iraq, Afghanistan, and Pakistan want to become Syrian in order to secure their recognition as asylum seekers in Western Europe. According to press reports, nine out of ten refugees who came from Macedonia to Serbia claimed they were Syrians.”

Setting the expectations was the head of the EU frontier police, Fabrice Leggeri, who in a recent interview with the Europe 1 TV station said that the trade in fake Syrian passports originated in Turkey. “There are people who are now in Turkey, buying false Syrian passports because they have obviously realized that it is a windfall since Syrians get asylum in all Member States in the European Union,” he said. “People who use false Syrian passports often speak in Arabic. They may originate in North Africa or the Middle East, but have the profile of economic migrants.

And then just to ratchet the fear factor, earlier this week Hungary’s most watched national TV channel, M1, reported Tuesday that at least two “terrorists” were uncovered via photographs on social media after entering Europe as refugees.

RT has more:

“Islamist terrorists, disguised as refugees, have showed up in Europe. [The] pictures were uploaded on various social networks to show that terrorists are now present in most European cities. Many, who are now illegal immigrants, fought alongside Islamic State before,” the report said.

The Hungarian channel broadcasted collections of photographs of the two men from social media. The first set depicted two individuals with weapons and the second set showed them smiling as they arrived in Europe.

A breach in the “terrorism has arrived” narrative emerged it was revealed that the man claimed to be an Islamic State militant had previously given an interview to AP, saying that he was a former Syrian rebel commander. “The AP reported that his name was Laith Al Saleh, 30, and he “led a 700-strong rebel unit in Syria’s civil war.” The news agency’s photos taken on August 15 showed Al Saleh among other refugees waiting to board an Athens-bound ferry on the Greek island of Kos.”

And then it gets awkward: AP reported that he was a member of the Free Syrian Army, which is fighting against the Syrian government forces of President Bashar Assad, as well as against terrorist groups in the region.

Actually, the US-funded and supported FSA’s only purpose was the same as that of ISIS – to crush the Syrian army and overthrow the elected president so Qatar can break Gazprom’s monopoly on European gas imports.

But now the second key role of ISIS is also starting to emerge: the terrorist bogeyman that ravages Europe and scares the living daylight out of people who beg the government to implement an even more strict government apparatus in order to protect them from refugees ISIS terrorists.

But ignore the facts, and focus on the propaganda, which as RT further adds is in full crisis mode: A recent article in the UK Express Daily claimed that IS “smuggled thousands of covert jihadists into Europe.” It cited a January BuzzFeed interview with an IS operative who said the militants have already sent some 4,000 fighters into Europe under guise of refugees.

These speculations have not been confirmed by Western security officials, although that’s only temporary: as the need to ratchet up the fear factor grows, expect more such reports of asylum seekers who have penetrated deep inside Europe, and whose intentions are to terrorize the public. Expect a few explosions throw in for good effect.

Certainly expect a version of Europe’a Patriot Act to emerge over the next year, when the old continent has its own “September 11” moment, one which will provide the unelected Brussels bureaucrats with even more authoritarian power.

And since everyone knows by now “not to let a crisis go to waste” the one thing Europe needs is a visceral, tangible crisis, ideally with chilling explosions and innocent casualties. We expect one will be provided on short notice.

Russia is making natural gas deals bypassing Bulgaria, Ukraine and Slovakia which is infuriating the west.
What do you expect them to do?
(courtesy zero hedge)

“They’re Making Idiots Of Us!”: Eastern Europe Furious At West For Doing Gas Deals With Russian Devils

Back in June, when Greece was still predisposed to waving around an MOU for participation in the Turkish Stream natural gas pipeline in a desperate attempt to play the Russian pivot card and force Brussels to blink, we remarked that the Turkish Stream MOU with Greece wasn’t the only preliminary energy deal Gazprom inked at the St Petersburg International Economic Forum.

The company also signed a memorandum of intent with Shell, E.On and OMV to double the capacity of the Nord Stream pipeline — the shortest route from Russian gas fields to Europe — to 110bcm/year.

That, we said, proves Russia is making progress in efforts to facilitate the unimpeded flow of gas to Europe even as the crisis in Ukraine escalates.

Nearly three months later and Ukraine isn’t happy. Neither is Slovakia. Here’s Bloomberg:

Eastern European nations set to lose billions of dollars in natural gas transit fees are lambasting western Europe for striking another pipeline deal with Russia that will circumvent Ukraine.


The prime ministers of Slovakia and Ukraine criticized an agreement between western European companies from Germany’s EON AG to Paris-based Engie with Russian pipeline gas export monopoly Gazprom PJSC to expand a Baltic Sea link. Western European leaders and companies are “betraying” their eastern neighbors, Slovakia’s


Robert Fico said after meeting Ukraine’s Arseniy Yatsenyuk in the Slovak capital of Bratislava on Thursday.


Gazprom and EON, Engie, Royal Dutch Shell Plc, OMV AG and BASF SE signed an agreement last week to expand Nord Stream by 55 billion cubic meters a year, or almost 15 percent of current EU demand. Ukraine, already struggling to avoid a default amid a conflict with Moscow-backed separatists in its east, is set to lose $2 billion a year in transit fees while Slovakia would lose hundreds of millions of euros, the leaders said.


Russia is trying to cut how much gas it ships via Ukraine’s Soviet-era pipelines as international courts arbitrate in pricing disputes between the nations, echoing spats that caused supplies to Europe to halt several times during the past decade. Russia currently ships about a third of its Europe-bound gas via Ukraine, down from about two-thirds in 2011, when the Nord Stream pipeline under the Baltic Sea started supplying Germany directly.



Nord Stream-2, set to start supplying Europe in 2019, completely neglects Polish interests and hurts the EU’s unity in the face of Russian President Vladimir Putin’s “aggression” in Ukraine, Polish President Andrzej Duda said on Wednesday. Ukraine’s Yatsenyuk called the project “anti-Ukrainian and anti-European” on Thursday.


“They are making idiots of us,” Fico said. “You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation.”

Well, sure you can.

In fact, when it comes to making grand public declarations about “stabilizing” unstable geopolitical situations and then turning around and doing something completely destabilizing, the West (and especially the US) are without equal, as evidenced by all manner of historical precedent including Washington’s efforts to help sack Viktor Yanukovych whose ouster precipitated the conflict in Ukraine in the first place. And make no mistake, to the extent there’s energy and money involved, that’s all the more true which is why it isn’t at all surprising that Western Europe would facilitate a deal that lets Gazprom bypass a war zone if it means getting natural gas to countries that “matter” in a more efficient way.

Now that doesn’t mean the EU won’t cover its tracks by filing anti-trust charges against Gazprom or by publicly decrying the Kremlin’s alleged role in fueling Ukraine’s civil war, but what it does mean is that the interests of war-torn nations and their beleaguered masses simply don’t matter when there’s natural gas involved.

Just ask a Syrian refugee.




Over in Brazil, the 100 year bond issued by Petrobras this year is already down, trading at 70 cents on the dollar with yields of 10%.  The state owned oil company flashed its 5 year outlook for the company and that is now outdated.  S and P cut Petrobras rating on Thursday to junk. The downgrade raises the cost on is huge 130 billion dollars worth of debt. We will start to see many pension funds liquidate the Petrobras shares and debt once it has been identified by junk by two official agencies



(courtesy zero hedge)

Petrobras “Century” Bond Prices Collapse As ‘June Plan’ Already “Obsolete”

Remember June – when everything was (apparently) awesome in BRIC-land and somehow a large group of duration-seeking greater-fools used Other-People’s-Money to buy Petrobras bonds that mature in 100 years! Well those bonds are now trading less than 70c on the dollar (with yields pushing 10%) as Brazil’s state-run oil company Petrobras, which slashed its five-year spending plan by 40% in June, admits that plan is already obsolete(two company sources told Reuters on Thursday). Petrobras will likely cut back further as growing debt costs, falling oil prices and a weak currency are the perfect storm for the company.

Still “money good”? Only another 99.75 years to hold them on your balance sheet to find out…

As Reuters reports,

 Standard & Poor’s decision to cut Brazil’s sovereign credit rating to “junk” grade on Wednesday was followed by a separate downgrade for Petroleo Brasileiro SA, as Petrobras is known, on Thursday.


The sources said the downgrade will raise the cost of refinancing Petrobras’ more than $130 billion of debt and reduce the capital available to drill wells, build production ships and refineries and pay for infrastructure to boost output and revenue.


“The June plan is already obsolete, its outlook for oil prices, debt costs and the currency are no longer realistic. The plan will have to be changed,” one of the sources said.


In a statement released late on Thursday, Petrobras said its project financing was sound in the medium term and is not affected by a downgrade in credit risk by a ratings agency.



The S&P move is also Petrobras’ second downgrade to junk this year after Moody’s Investors Service stripped the company in February.


Many foreign pension funds and other large investors are required to unload bonds once two separate agencies rate them as speculative grade. That could lead to a plunge in the price of existing Petrobras debt and limit the pool of buyers for new offerings.


The second source said that a revision of the plan’s premises and spending will be needed.

*  *  *

With PBR’s equity price also collapsing…



We leave it to one of Reuters’ sources to conclude:“These are times that will try our hearts.”

Oil related stories for today:
Iran cuts crude selling price to Asia:
(courtesy zero hedge)

Iran Cuts Crude ‘Selling Price’ To Asia To 3-Year Low

In what appears to be a bid to lure Asian buyers to lock in longer-term supplies, Reuters reports that Iran has cut its quarterly selling price (for its flagship ‘light’ crude) to its lowest (relative to Saudi) since Q4 2012. According to recent tanker loading data, Iran’s oil sales in September are set to hit a six-month low, and this price reduction is just one of the steps taken by the OPEC producer to ramp up output and regain market share lost since U.S. and European sanctionsaimed at its nuclear program cut its crude oil exports by more than half.

Iran has cut its relative prices notably over the past year…

Iran set its official selling price (OSP) for Iranian Light crude for October at a 25 cents a barrel premium to Oman/Dubai, down 35 cents from the month before, two sources with knowledge of the matter said on Thursday.

This puts Iranian Light OSP at a 15-cent premium to Saudi’s Arab Light in the fourth quarter, the lowest quarterly price since the last three months of 2012, according to Reuters data.

As Reuters reports,

Asian buyers have called for lower prices amid a supply glut that has made it tougher for Iran to elbow its way to higher sales volumes despite optimism over the deal that eased some of the sanctions in exchange for curbs on Tehran’s nuclear work.

An executive at a North Asian oil refiner said it is in talks with the National Iranian Oil Company for next year’s term supply, but that Iran’s crude prices have been uncompetitive.

Iran sets its OSPs every quarter at differentials to Saudi prices, following discussions with key customers.

In the fight for market share, Iran and fellow members of the Organization of the Petroleum Exporting Countries, including Kuwait and Iraq, have dangled carrots in the form of extended credit and free oil deliveries in addition to outright price cuts to increase their sales.

*  *  *

Time for another sit down in The White House with The Sauds…




For what it is worth, Goldman Sachs believes oil can sink to 20 dollars.

(courtesy Goldman Sachs/zero hedge)

$20 Oil? Goldman Says It’s Possible

We’ve long framed collapsing crude prices as a battle between the Saudis and the Fed.

When Saudi Arabia killed the petrodollar late last year in a bid to bankrupt the US shale space and secure a bit of leverage over the Russians, the kingdom may or may not have fully understood the power of ZIRP and the implications that power had for struggling US producers. Thanks to the fact that ultra accommodative Fed policy has left capital markets wide open, the US shale space has managed to stay in business far longer than would otherwise have been possible in the face of slumping crude. That’s bad news for the Saudis who, after burning through tens of billions in FX reserves to help plug a yawning budget gap, have now resorted to tapping the very same accommodative debt markets that are keeping their competition in business as a fiscal deficit on the order of 20% of GDP looms large.

But even with a gaping hole in the budget and an expensive proxy war raging in Yemen, it’s not all bad news for Saudi Arabia as evidenced by King Salman’s lavish Mercedes procession upon arrival in DC last week and as evidenced by the fact that, as The Telegraph reports, non-cartel output is beginning to fold under the pressure of low prices. Here’s more:

Oil produced outside the Orgainsation of the Petroleum Exporting Countries (Opec) is slowing at its fastest rate in 20 years as lower prices hit higher cost producers such as the North Sea and US shale drillers, a leading energy think tank has warned.


The Paris-based International Energy Agency (IEA) has said that lower production in the US, Russia and the North Sea would result in output outside Opec dropping to 57.7m barrels per day (bpd) in 2016. The majority of the declines would come from US light crude, which is expected to decline by 400,000 bpd.


“The steep declines in US crude oil production seen since the end of June has created some optimism that we are now finally seeing that start of a steep decline,” said Bjarne Schieldrop, chief commodities analyst at SEB.


Oil prices have plunged 50pc this year with Brent crude trading well below $50 per barrel, a level which makes it uneconomical for many producers. Opec, under pressure from Saudi Arabia, has allowed oil prices to fall in an effort to protect its shrinking market share especially from the rise of shale oil drillers in the US.

So mission (partially) accomplished we suppose, and with banks set to reevaluate credit lines to US producers next month (i.e. the revolver raids are coming), it likely won’t be long before the competition starts to dry up. The only remaining question then, is how low will oil go in the near- and medium-term and on that point we go to Goldman for more:

Oil prices have declined sharply over the past month to our $45/bbl WTI Fall forecast. While this decline was precipitated by macro concerns, it was warranted in our view by weak fundamentals. In fact, the oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China’s slowdown and its negative EM feedback loop. 


So a persistent global deflationary supply glut driven by lackluster demand. Nothing new there, and in fact, that exact confluence of factors was tipped to send oil to $25 in these very pages more than nine months ago. Now back to Goldman:

Given our updated forecast for a more oversupplied oil market in 2016, we are lowering our oil price forecast once again. Our new 1-, 3-, 6- and 12-mo WTI oil price forecast are $38/bbl, $42/bbl, $40/bbl and $45/bbl. Our 2016 forecast is $45/bbl vs. $57/bbl previously and forwards at $51/bbl. As we continue to view US shale as the likely near-term source of supply adjustment given the short cycle nature of shale production, we forecast that US Lower 48 crude & NGL production will decline by 585 kb/d in 2016 with other non-OPEC supply down 220 kb/d to end the oversupply by 4Q16.


Got it. And just how low, in a worst case scenario, could crude go?

This creates the risk that a slowdown in US production takes place too late or not at all, forcing oil markets to balance elsewhere or as they have historically cleared, through a collapse to production costs once the surplus breaches logistical and storage capacity. Net, while we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20/bbl Brent prices, on our estimates. While such a drop would prove transient and help to immediately rebalance the supply and demand for barrels, it would likely do little for the longer-term capital imbalance in the market with only lower prices for longer rebalancing the capital markets for energy. 

So there you have it, a collapse to $20 Brent, but while the Saudis may have won the battle, the war is not yet over:

The levers to force HY producers into lower production, such as borrowing basis redeterminations, debt maturities and hedge coverage, are significantly less binding for IG E&Ps. It is instead management’s focus on balancing capex and cash flow and investors’ willingness to finance funding gaps that are the levers of adjustments for this cohort of companies. And while HY debt markets may be once again shutting, tentative signs of greater discipline by US IG E&Ps have so far only translated in stabilizing production guidance rather than pointing to the decline that our global oil balance requires.


As a result, the sharp intensification in producer financial stress observed recently – with forward oil prices and energy equity share prices at multi-year lows (and credit spreads at highs) – is unlikely to yield sufficient financial stress in the short-term. So while this deterioration in financial conditions is finally reflecting the markets’ decreasing confidence in a quick rebound in prices and a recognition that the rebalancing of supply and demand will likely prove to be far more difficult than previously expected, we now believe that such stress needs to remain in place well into 2016 and up until evidence emerges that US shale production growth is actually required.


And speaking of war, the obvious risk to any forecast that calls for sharply lower crude is that some mid-air “accident” in Syria takes the “proxy” out of “proxy war”, in which case crude soars as Russia and Iran square off against a US coalition that would swiftly include Saudi Arabia in what would very likely be the precursor to a wider conflict the scope of which we haven’t seen since 1939.

Oh, and for all the muppets out there, Goldman has upgraded European oil producers:

Dividends may be cut, but with over coverage now yielding 6% on average this is becoming priced in. We expect returns and FCF to trough in 2016, and improve in 2017/18 driven by higher oil prices and falling costs. Even with this, valuations do not yet look compelling, but we move to a Neutral Coverage View from Cautious.

Disaster in Mecca:
Interesting:  occurs on 9/11…Shemitah??
(courtesy zero hedge)

87 Dead After Crane Collapses In Saudi Arabia’s Grand Mosque Following Storm, Lightning Strike

At least 87 people were killed after a crane crashed earlier today in Mecca’s Grand Mosque with Saudi Arabia’s Civil defense adding another 184 people were injured in the fatal accident which takes place just weeks before Islam’s annual Hajj pilgrimage which takes place between September 21-26.


The video captures the moment of the crane collapse:


According to Al Arabiya, the reason for the crane collapse were strong storms in the area, although there has been no official explanation yet.

Some point out pictures circulating on social networks showing a lightning strike hitting the area of the crane moments before the fatal collapse. Others point out the macabre coincidence that this tragedy takes place on the 14th anniversary of September 11.


As Reuters reports, the pilgrimage, one of the largest religious gatherings in the world, has been prone to disasters in the past, mainly from stampedes as pilgrims rushed to complete rituals and return home. Hundreds of pilgrims died in such a stampede in 2006.

Ironically, today’s disaster comes as Saudi authorities have since lavished vast sums to expand the main hajj sites and improve Mecca’s transportation system, in an effort to prevent more disasters.

Saudi authorities began a major expansion of the site last year to increase the area of the mosque by 400,000 square metres (4.3 million square feet), to allow it to accommodate up to 2.2 million people at once.

The crane that collapsed on Friday was one of a number dotted around the site as part of the construction project.

This guy has it right about oil.  He states that the Saudis are winning the war on shale.
(courtesy Leonid Bershidsky/Bloomberg)

Saudis Are Winning the War on Shale

Leonid Bershidsky

6SEPT 11, 2015 10:00 AM EDT

If you believe all the recent stories about how Saudi Arabia is losing the price war it started against U.S. tight oil producers last year, the new Oil Market Report from the International Energy Agency offers a reality check. The Saudis are winning, though they’re paying a heavy price for it.

The narrative about U.S. shale’s resilience in the face of the Saudi decision to drive up production, prices be damned, centers on the American industry’s ability to cut costs and use innovative technology to repel the brute force onslaught. There is a kind of David versus Goliath charm to this story, but the data don’t bear it out. The IEA, the world’s most respected independent source of information about the oil market, has changed its methodology for measuring U.S. output: It now polls producers, instead of relying on data from states. And the switch has caused the agency to revise production data for the first half of 2015, showing a noticeable slowdown. 

The U.S. is still pumping more than it did last year, but the output is declining:


IEA data show monthly contractions of 90,000 barrels a day in July and almost 200,000 barrels a day in August. Output is dropping for all seven of the biggest U.S. shale plays. The IEA predicts that the U.S. production of light tight oil — the type pumped by frackers — will go down by 400,000 barrels a day next year, about as much as Libya currently produces. That drop will account for most of the 500,000 barrels a day drop in production outside the Organization of Petroleum Exporting Countries that the agency predicts for 2016. Production is also dropping in Canada: It’s below 4 million barrels a day for the first time in 20 months.

The IEA doesn’t believe shale oilers’ incantations about drastically lower marginal cost of producing oil from already drilled wells. It points out that tight oil wells dry up much faster than traditional ones: Recent data show that output drops 72 percent within 12 months of startup and 82 percent in the first two years of operation. “To grow or even to sustain production levels requires continuous investment,” the IEA report says. Low oil prices reduce frackers’ access to the capital they need, and rig counts are falling again — in early September the drop was the steepest since May.

The number of active rigs has fallen by 40 percent from a year ago. They are far more productive, because they are only being used in the most profitable locations, but that tactic has largely exhausted itself. A steeper production decline cannot be staved off for much longer.

None of this should come as a surprise. If there is one thing the Saudis know about, it’s oil. They know all about the new technology used by U.S. shale, too: They work with the same international service companies and attend the same conferences. They did not make a dumb mistake gambling with their only economic advantage. The IEA reported: “On the face of it, the Saudi-led OPEC strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, ‘inefficient’ production.”

The perception that Saudi Arabia is losing the oil war is based on the absence of a spectacular rout in the U.S. — the shale industry hasn’t collapsed, right? — as well as the Saudis’ own fiscal difficulties. The kingdom is certainly running through its foreign currency reserves faster than shale oil output is falling:


So what, price wars are costly. And victory in them doesn’t usually mean the complete destruction of the losing side. Rather, the Saudis seek submission.

The IEA notes an increase in demand for oil at the current low prices. Much of that increase is in developed countries, including the U.S., where people are more willing to take long drives now gasoline is cheaper. It will be the Saudis, pumping at near record levels, who meet this extra demand — not U.S. frackers. OPEC has 2.27 million barrels a day of spare capacity, with 86 percent of that in Saudi Arabia’s hands.

The Saudis are teaching the market that they are the go-to suppliers at any price level and that they’re always going to be there, unlike those fly-by-night American operators. They’re also teaching investors in U.S. shale that as soon as they plow more money into the sector, they, the Saudis, will boost output and drive prices lower, ruining the economic models on which the investment decision was based. That’s a lesson they want to sink in, because there’s still a lot of talk about shale’s nimbleness in responding to changing price conditions.

Leaving purely financial speculation aside, oil prices cannot go up for any extended period while the Saudis are teaching their oil class to the frackers. So long as the U.S. shale industry reacts to price rises with production increases, prices will keep falling back. They will stabilize at a level acceptable to petrostates only once that response becomes muted. No victory announcement will be needed: Things will just look peaceful again.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at


Your humour for tonight:


Friday Humor: Instructions To Traders In The Event Of A Cyber Attack


h/t @Erdal_Ozkaya





and then this!!



The Iran Deal (In Perspective)

Presented with no comment…








Your early Friday morning currency, and interest rate moves

Euro/USA 1.1257 down .0025

USA/JAPAN YEN 120.60 down .061

GBP/USA 1.5409 down .0031

USA/CAN 1.3247 up .0018

Early this Thursday morning in Europe, the Euro fell by 25 basis points, trading now well above the 1.11 level falling to 1.1188; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece and the Ukraine, rising peripheral bond yields, flash crashes and today crumbling bourses.  Last night the Chinese yuan raised in value . The USA/CNY rate at closing last night:  6.3747, falling .0017  (Yuan rising)/

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen now trades in a northbound trajectory  as settled up again in Japan up by 6 basis points and trading now just above the 120 level to 120.64 yen to the dollar. 

The pound was  down this morning by 31 basis points as it now trades well above the 1.54 level at 1.5409.

The Canadian dollar reversed course by rising 18 basis points to 1.3247 to the dollar. (Harper called an election for Oct 19)

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially  with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable. 

2, the Nikkei average vs gold carry trade (blowing up)

3. Short Swiss franc/long assets (European housing/Nikkei etc. This has partly blown up (see Hypo bank failure).(blew up)

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this Friday morning: down by 35.40 or 0.19%

Trading from Europe and Asia:
1. Europe stocks all in the red

2/ Asian bourses all in the red (except intervention in Shanghai)  … Chinese bourses: Hang Sang red (massive bubble forming) ,Shanghai slightly in the green (massive bubble ready to burst), Australia in the red: /Nikkei (Japan)red/India’s Sensex in the red/

Gold very early morning trading: $1106.75


Early Friday morning USA 10 year bond yield: 2.20% !!! down 3  in basis points from Thursday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield rises to  2.96 down 2 basis points.

USA dollar index early Friday morning: 95.65 up 15 cents from Thursday’s close. (Resistance will be at a DXY of 100)

This ends the early morning numbers, Friday morning
And now for your closing numbers for Friday night:
Closing Portuguese 10 year bond yield: 2.61% up 3 in basis points from Thursday
Japanese 10 year bond yield: .3450% !!  a fall of 1/2  basis points from Thursday
Your closing Spanish 10 year government bond, Friday, up 1 in basis points Spanish 10 year bond yield: 2.11% !!!!!!
Your Friday closing Italian 10 year bond yield: 1.83% down 3  in basis points from Thursday: trading 28 basis point lower than Spain.
Closing currency crosses for FRIDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 Euro/USA: 1.1341 up .0059 (Euro up 59 basis points)
USA/Japan: 120.56 down 0.100 (Yen up 10 basis points)
Great Britain/USA: 1.5426 down .0013 (Pound down 13 basis points USA/Canada: 1.3254 up .0024 (Canadian dollar down 24 basis points)

USA/Chinese Yuan:  6.3735  down .0033  (Chinese yuan up/on shore)

This afternoon, the Euro rose by 59 basis points to trade at 1.1341. The Yen rose to 120.56 for a gain of 10 basis points as this ramp failed to ignite the NYSE/Nasdaq. The pound was down 13 basis points, trading at 1.5426. The Canadian dollar fell 24 basis points to 1.3254. The USA/Yuan closed at 6.3735.
Your closing 10 yr USA bond yield: down 4 basis points from Thursday at 2.19%// ( well below the resistance level of 2.27-2.32%).
USA 30 yr bond yield: 2.95  down 3 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 Your closing USA dollar index: 95.417 down 33 cents on the day .
European and Dow Jones stock index closes:
England FTSE down 38.05 points or 0.62%
Paris CAC down 47.81 points or 1.04%
German Dax down 86.88 points or 0.85%
Spain’s Ibex down 121.10 points or 1.23%
Italian FTSE-MIB down 138.82 or 0.63%
The Dow up 102.69 or 0.63%
Nasdaq; up 26.09 or 0.54%
OIL: WTI:  $45.11    and  Brent:  $48.68
Closing USA/Russian rouble cross: 67.80  down 9/100 roubles per dollar on the day
And now for your more important USA stories.
Your closing numbers from New York

Stocks & Bond Yields Surge’n’Purge Thanks To “Asian Intervention Week”

In case you were unaware of what happened this week… this should explain it… The 3 Storms of Li, Zhou, and Kuroda stepped in!!


Before we get started – let’s get this off our chest:

Asia Intervention Week anyone?

  • ChiNext (+11.1%) – best week in 4 months
  • Shenzhen Composite (+6.4%) – best week in 2 months

It looks like they finally killed it…

  • Nikkei 225 (+2.7%) – best week in 2 months
  • Copper (+6%) – best week in 4 months
  • Offshore Yuan (+0.9%) – best week in 6 months
  • USDJPY (+1.3%) – biggest jump (JPY’s biggest weakening) in 4 months
  • USD Index down 6 days straight – longest streak in 5 months

That bled over into some US markets:

  • VIX (-11.6%) – biggest weekly drop in 2 months
  • Dow Transports (+3.1%) – biggest week since last week of July
  • S&P Tech Sector (+2.75%) – best week in 2 months
  • S&P Biotechs (+5.5%) – best week in 2 months

*  *  *

Equity futures markets provide perhaps the most clarity on the week’s swings (since most of the action takes place before and after the US sessions)…


An afternoon ramp dragged everything green for the day… Of course – we warned the bears!!!


And so from Friday, cash equity indices all closed green for the week… Trannies and Small Caps soared over 3 weeks – the easiest to short squeeze!!


Energy was the week’s loser while Tech and homebuilders surged…


Put-Call ratios (average over the last 2 weeks) are at their hghest since March 2007


Treasusry yields massively round-tripped on the week… 2Y yields ended very modestly lower with 30Y up just 7bps (well off its 3.037% highjs on 9/9)


The USD Index has fallen for 6 straight days – its longest streak since April… as EUR (and AUD) strength handily beat JPY weakness…


With a ‘Death Cross’ looming amid a coiling USD Index making lower highs…


Despite the week’s USD weakness, commodities (in general) were lower (with WTI worst)… Gold down 3rd week in a row.


Oil and Vol remains notably decoupled post-Andy-Hall’s month-end malarkey…


The exception being copper… Which lifted thanks to China intervention early in the week…notice anything odd?


Copper had its best week (up almost 6%) in 4 months… the last time it had a rip-fest week like this marked the early May highs and led to a serious decline…


Charts: Bloomberg

Bonus Chart: Brazil Banged Back To 2005…


Producer prices rise at a .9% year over year clip, the hottest since March and much above expectations. This raises slightly the odds that the fed will raise rates next week.  Remember, the key will be the reaction of the long bond:  if they raise rates  (i.e. short term rates) and the long bond yield falls, then the market strongly believes that the Fed got it wrong and a severe recession is imminent.
(courtesy zero hedge)

Fed Rate Hike Odds Rise After Hotter-Than-Expected Producer Price Data

While still well below Fed mandated levels, the 0.9% year-over-year rise in PPI Final Demand ex Food & Energy is the hottest since March and notably above expectations. While the headline PPI Final Demand YoY has not risen for 8 months, surging prices for chicken eggs (+23%) and apparel (+7%) in August made up a considerable part of the inflation index move and bond yields and stocks are leaking lower on the news ahead of next week’s FOMC meeting.

The key drivers from the report:

Almost half of the August advance in the index for final demand services is attributable to margins for apparel, footwear, and accessories retailing, which jumped 7.0 percent. The indexes for automotive fuels and lubricants retailing; securities brokerage, dealing, investment advice, and related services; wireless telecommunication services; residential real estate loans (partial); and inpatient care also moved higher. Incontrast, prices for airline passenger services declined 1.6 percent. The indexes for machinery and equipment wholesaling and guestroom rental also fell.


Accounting for nearly two-thirds of the decline in the final demand goods index, prices for gasoline fell 7.7 percent. The indexes for jet fuel, grains, iron and steel scrap, home heating oil, and light motor trucks also moved lower. In contrast, the index for chicken eggs surged 23.2 percent. Prices for residential natural gas and for search, detection, navigation, and guidance systems and equipment also increased.

PPI has now beaten expectations for 3 months in a row and stands at 6 month highs:

And the breakdown:

With wholesale inflation starting to creep up, is the fate of the Fed’s “most expected announcement ever” all but assured? 

*  *  *

September rate hike odds have risen from 25% to 28% since PPI printed (and bond yields, stocks, and the dollar are sliding).

And while stocks have done nothing in the wake of the report, there has been an ominous move higher in Treasury prices:


Remember: if the Fed hikes, the only thing that matters is the long-end: if yields drop, it means the market is convinced the Fed just engaged in a massive policy error, and curve inversion and a recession may be imminent. 



The Fed will not like this number when they decide to raise rates.  Remember that the consumer is 70% of GDP

The number crashed!!!  from 83.4 to 76.4.   Expectations were for a rise to 91.1
(courtesy U of Michigan Consumer Confidence/zerohedge)

UMich Consumer Confidence Tumbles To 12-Month Lows With Biggest Miss On Record

Having fallen and missed the last two months, UMich Consumer Sentiment plunged in September’s preliminary data from 91.9 to 85.7 (dramatically missing the 91.1 expectations) crashing to its lowest in a year. This is the biggest miss on record. Crucially, this is the all-important factor that The Fed’s Dudley said he would be monitoring ahead of his decision on rate hikes… Hope collapsed as “expectations” tumbled from 83.4 to 76.4 – the lowest in  a year as 73% of respondents cited negative economic developments seeing a weaker econmomy due to a global growth slowdown.


Not pretty…


Reality is also starting to set in for the majority who expected higher incomes in th enext year has now dropped to just 48.3% – its lowest since 2014.


Charts: Bloomberg

Before we get the official retail sales for August which comes out on Sept 15, two days before the FOMC results as to whether they will raise rates or note, we have two preliminary reports to give us a good idea as to what happened with respect to the consumer in August:
First:  Gallup poll
Second:  Bank of America’s internal stats
Both data points seem to suggest a disaster for August and this will be the last thing that the FOMC sees before its decision on whether to raise rates or note:
(courtesy zero hedge/Gallup/Bank of America)

Last Thing The Fed Sees Before Its Rate Hike Decision Will Be Very Ugly

Earlier this week we warned that based on the latest Gallup poll of some 15,000 US shopping adults (and thus far more accurate than the Department of Commerce seasonally adjusted, goal-seeked retail sales data), retail spending in August will be a stark disappointment to those once again holding off for a rebound in that all important driver for the US economy – consumer spending. As we showed, August spending was the weakest in nominal dollar terms since 2012…


…  and was also the lowest since March, as a result of 4 consecutive months of y/y spending declines.


Earlier today, Bank of America confirmed just that using its internal data, which tracks aggregate spending on credit and debit
cards, showing that consumers reduced spending in August.

And they reduced it substantially: According to the Bank, while the drop was not as pronounced as what Gallup reported (which saw average daily spending slide from $91/day to $89/day), it was still enough to dramatically impact the economy: “our headline measure, retail sales ex-autos, plunged 0.8% mom seasonally adjusted.”

The weakness was not focused geographically, and was widespread across the nation:


As BofA notes, “there was broad weakness in retail sales ex-autos and gas spending growth across metropolitan areas, with seven of the ten largest MSAs showing a monthly decline. The biggest monthly decline was in Dallas, followed by Miami and San Francisco. Both Dallas and San Francisco have experienced strong growth over the prior six months, showing a solid recent trend.”

What could be causing this at the aggregate level? One explanation is far weaker than expected back to school sales:

Retail sales in August are typically boosted by back-to-school shopping. Our proxy for back-to-school sales, which includes teen retail stores, sporting goods and categories within electronic stores and school supplies, was up 2.6% yoy on a seasonally adjusted basis. But this is a slowdown from the past few years and consistent with the slower yoy trend in retail sales ex autos and gas (Chart of the month).


The late timing of the Labor Day holiday may have created a downside bias to back-to-school sales this August. Many schools start after Labor Day, which may push back-toschool sales from August to September. Indeed, the seasonal factor for our back-to-school composite seems particularly large this year given the notable adjustment in the timing of the Labor Day holiday to the 7th of September this year from the 1st last year.

Some more details:

  • Sales at teen retailers declined 1.3% mom in August on a seasonally adjusted basis, based on the aggregate BAC card data. This left sales down 6.2% yoy, continuing the weak trend over the past few years.
  • The weak performance of teen retailers in August is an indication of a sluggish back-to-school shopping season
  • Spending at sporting goods stores inched up 0.2% mom SA. This left the trend positive with an increase of 2.0% yoy.
  • Budget constrained households continue to direct spending to on-trend athletic apparel (“athleisure”), which is gaining share at the expense of casual apparel.


The weakness was most pronounced  at department stores, where sales fell 0.2% M/M and tumbled 3.5% Y/Y.  While this is not a new trend and indicates the shift away from bricks and mortar to online vendors, the lack of any improvement merely confirms the broad weakness in consumer spending in the past month.

Finally, as Bank of America reiterates our conclusion from earlier this week when we observed precisely this only with Gallup poll data, “the weakness in the August BAC data suggests a high risk for softness in the Census Bureau advance retail sales report given that the two measures trend closely. While we know that the retail sales figures are volatile and subject to revisions, it is hard to ignore a weak report.

Why is all of the above particularly important? Because with the August Retail Spending report due out the morning of September 15, it will be the last report on the economy the Fed will read ahead of its “most important if not ever then surely in the past decade” FOMC meeting starting on September 16, and concluding with the 2pm announcement on September 17.

Following today’s plunge in consumer confidence (which as a reminder Bill Dudley warned two weeks ago he will be very closely watching ahead of the FOMC meeting) and what is set to be a big drop in the retail spending report next Tuesday, will Yellen really be “data-dependent” if she hikes just as the economy is rapidly downshifting, not to mention the US consumer is about to tap out once again? 

If nothing else, the “Dow-dependent” Fed now has a very clear “data” out to delay its September rate hike by at least 3 months, even if the actual delay driver has nothing to do with the US economy whatsoever.


Do you remember those nasty Ted spreads indicating danger in 2010-2011?
They are back!!!
TED spread:  difference between 3 month Libor vs 3 month treasury bill
or interest rate charged on bank loans for 3 months vs 3 month interest rate on treasury bills.  The increase in TED spreads indicate huge problems in the health of banks.
(Jeffry Snider/Alahambra Partners/courtesy zero hedge)

Interbank Credit Risk Is Rising Ominously Again In America



We have been anxiously reminding investors of the drip-drip-drip increases in market-perceived credit risk for US financials for much of 2015. Having risen to almost 90bps amid the chaos of 2 weeks ago (almost double the lowest levels post-Lehman hit in June of last year), it appears systemic counterparty risk is very much on the rise. What is more concerning however, as Alhambra’s Jeffrey Snider notes, the TED spread has exploded higher(since China’s devaluation) indicating, as convention has it, a marked increase in perceptions of interbank credit risk.

“Credit” risk perceptions have risen rapidly…


And now the ominous TED Spread is flashing warning signals about the US Financial system…


As Alhambra’s Jeffrey Snider notes:

With t-bills settled down again (another clue as to how disruptive the “dollar” run became at its worst), the TED spread has exploded higher indicating, as convention, a marked increase in at least perceptions of interbank credit risk.


The TED spread now is where it was in the weeks just following the flash crash(Greece/euro) in later May 2010, and equal to October 2011 after the SNB pegged to the euro and the Fed reproduced dollar swaps globally.


This is significant and seems to be underappreciated everywhere but places like VIX (and especially longer VIX futures).

*  *  *

Despite some modest amelioration in the last week – after massive seemingly coordinated intervention, perhaps, investors will start paying attention now.

 Earlier in the year, we brought you the story that Wal-Mart was raising the minimum wages of its employees to 15.00 dollars per hour.  The cost would be 1 billion dollars to Wal-Mart’s balance sheet. Zero hedge then commented that Wal_Mart would do anything possible to cover that cost such as:
1) lower number of hours
2. fire quite a few workers
3. new fees to be paid by the suppliers
It seems that we may have a rebellion by the suppliers as the increased cost to do business with WalMart may force them out of business.
(courtesy zero hedge)

Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees

Earlier this year, in “What Happens After A Mega Corporation Raises Its Workers’ Wages,” we detailed the plight of Wal-Mart’s supply chain in the wake of the retailer’s decision to raise the pay floor for its lowest-paid employees. Here’s a recap:

When mega-corporations such as WalMart and McDonalds, whose specialties are commoditized products and services and who have razor thin margins, yet which try to give an appearance of doing the right thing, by raising minimum wages, they start flexing their muscles, and in the process trample all over the companies that comprise their own cost overhead: their suppliers and vendors. Take the case of WalMart: the world’s biggest retailer “is increasing the pressure on suppliers to cut the cost of their products, in an effort to regain the mantle of low-price leader and turn around its sluggish U.S. sales.” 


What WalMart is doing is borderline illegal: it is explicitly telling its vendors “this is what you will do with your excess cash.” Of course, we say borderline because WMT’s action is perfectly legal in the confines of the pure law. However, in the context of an economy that is sputtering, WMT’s vendors have no choice but to comply or risk losing what is certainly their largest revenue stream and risk bankruptcy. 


The irony is that while WMT (or MCD or GAP or Target) boosts the living standards of its employees by the smallest of fractions, it cripples the cost and wage structure of the entire ecosystem of vendors that feed into it, and what takes place is a veritable avalanche effect where a few cent increase for the lowest paid megacorp employees results in a tidal wave of layoffs for said megacorp’s vendors.

As those who frequent these pages are no doubt aware, quite a bit has happened in Wal-Mart world since we penned those words. First there were “plumbing” problems which, for at least five locations, were so intractable as to necessitate store closures. Then came the mid-level management rumblings as the rest of Wal-Mart’s employees suddenly realized that an across-the-board wage hike for the lowest-paid workers meant the wage hierarchy was suddenly and irreversibly distorted. Shortly thereafter, a memo circulated at an Arkansas recruiting firm indicated a raft of layoffs could be in store for the Bentonville home office. Finally, unable to make up the $1 billion cost of the wage hikes and unable to pass that cost on to customers without surrendering the “low price leader” crown, Wal-Mart began cutting hours.

Now, we get still more evidence that the world’s largest physical retailer is attempting to make up for the cost of hiking wages by pressuring its suppliers only this time, the supply chain is pushing back. Here’sBloomberg with more:

After years of meeting demands for ever cheaper prices, many Wal-Mart Stores Inc. suppliers are saying no to new margin-squeezing storage fees and a payment schedule that could delay for months how quickly some are paid.


The world’s largest retailer says the changes, laid out for vendors starting in June, reflect a push to simplify its relationships with suppliers, put them all on the same footing and reduce costs so it can offer customers the lowest prices. But some vendors see the new policy as an attempt by Wal-Mart to fatten its margins and offset wage hikes for store workers earlier this year.

And whereas before, Wal-Mart was “merely” asking suppliers to do everything possible to lower prices (i.e. dictating how vendors will use FCF), this time, Wal-Mart is actually adding new fees:

Vendors were already feeling added pressure from Wal-Mart to cut costs after the retailer told them earlier this year to dial back on marketing and promotions and use the savings to lower their prices, he said.


Traditionally Wal-Mart has largely avoided the extra fees some other retailers charge, so the policy change was a surprise, said Leon Nicholas, a senior vice president at Kantar Retail, which advises dozens of Wal-Mart suppliers.


What is so shocking this round is that they are being aggressive not in asking suppliers to take costs out of the system so the supplier can lower prices, but instead adding cost into the system,” Nicholas said. “It looks as though they are trying to have it both ways and trying to pad their own margins where they are facing cost pressure.”

As for suppliers who don’t comply, well, they’ll be “punished”:

Wal-Mart could punish suppliers that don’t agree to all or some of the new terms by cutting back shelf space for a product, giving it less favorable placement in the store or dropping a supplier all together.

Just as we predicted back in April, the end result of Wal-Mart’s push to score public opinion points by making the meager wages of its lowest paid workers look a little less meager will be the elimination of jobs along the supply chain:

A smaller supplier, notified of the fees late last month and given two weeks to accept, said it won’t be able to make a profit on its Wal-Mart business under those terms unless it fires workers or cuts wages and benefits.

So there, once again, is economics 101 at work and as we noted late last month, it should have been abundantly clear from the start that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart, because after all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.

In the end, suppliers may be trying to push back, but they’re unlikely to cut their noses of to spite their faces by creating a contentious relationship with the company that’s responsible for their largest revenue stream which is why ultimately, it’s vendors’ employees who will suffer so that Wal-Mart’s cashiers can make $9/hour instead of $8. We’ll close with the following lament from Leon Nicholas (quoted above):

“You can push and push, but at the end of the day you know where the power lies.”


Now we know what happened yesterday at 6:12.  We had more spoofing and thus 2 flash crashes
(courtesy zero hedge)

We Now Know What Happened At 6:12 AM This Morning

In a day in which the total breakdown of the market and the sheer dominance of various HFT algos was painfully obvious for any remaining carbon-based trader forms to see, we started off with not one but two E-mini trading halts following ridiculous buying slams.

This is what we asked first thing this morning:

Anyone waking this morning will glance at US equity futures and happily note its unchanged-ness relative to weakness in Asia overnight. But behind the scenes of the last 12 hours was a total and utter farce of price discovery failure. S&P 500 e-mini futures have been halted twice (0551ET anbd 0612ET) in what one market observer exclaimed “looks like manipulation to me.” So what exactly happened at 6:12am?

We now know.

As Nanex shows, what happened at 5:51 am and at 6:12 am, the ES breaks were nothing more than an aggravated case of HFT spoofing – the same infringement which will likely send Navinder Sarao behind bars for years – which first sent the E-mini soaring higher so fast, it broke the velocity logic circuit, and then it smashed the E-mini lower.

Here is the first spoofing instance, which prompted Eric Hunsader to declare the manipulator “busted.” Indicatively, the entire move amounted to just about 20 S&P points on the way up, or about 0.4%.


And the second one: what goes up must come down.


In summary: what we do know: a nearly 1% move up and down in the S&P due to blatan – and illegal – spoofing manipulation; what we don’t know: the identity of the spoofer.

What is certain: if the culprit is a central bank or one of its trading agents like Citadel, the CFTC will never follow up. If it is some Indian living in his parents’ basement in a London suburb, you can run but you can’t hide.

The following hedge fund, Horseman Global has outperformed 99% of its peer consistently over these past few years.  They are generally short the market since 2012 and long bonds.
What is interesting is their description of China with respect to the small devaluation so far. Horseman Global believes that Chinese strategy is wrong footed.  The CEO believes that there will be further pressure on the currency cross which will lead to greater FX losses, as more USA treasuries are liquidated than had they just lowered the exchange lower.
(courtesy zero hedge)

“If It Bleeds, We Can Kill It” – Top Performing Hedge Fund Manager Compares China To The Predator

It is no accident that over the years, and especially in the past few months, we have been profiling what in our opinion is one of the few, truly worthy hedge funds, Horseman Global, which despite (or maybe due to) being net short stocks since the start of 2012 (and long bonds), has outperformed 99% of its peers and has generated tremendous returns during its lifetime.

Just last month, in “Short For Three And A Half Years And Outperforming 98% Of Traders: This Hedge Fund Did It“, we explained how in July the fund generated a 7% return, just as all the beta-levered, momentum-monkey, hedge fund hotel residents were losing steam.

One month later, and following a ghastly August in which virtually everyone lost money, the $2.5 billion Horseman was up a whopping 9.4%, and is now up 17.7% for the year.

And no, you can’t allocate the funds you redeemed from Ackman to Horseman at this moment: “Due to a high level of interest in the fund, we are again soft closing the fund. Any investment into the fund will need approval.”

But it was not easy, as the following story from Russel Clark, Horseman’s CIO, recounts in the fund’s monthly letter.

Being bearish on China for the last few years has reminded me of the 1987 action classic “Predator”. In the film, a special ops force are ordered on a mission to an unnamed South American jungle.


However, while trying to complete their mission they are slowly hunted down by an alien creature. At each stage, they think they have managed to trap it, but it continually defies anything any of them have seen before. It moves and lives in the trees! It can turn itself invisible! It has infra-red and heat vision! It has a shoulder mounted laser rifle! Needless to say most if not all of the members of the team succumb to its abilities….


For bears, much like the alien in Predator, the Chinese government has continually used special abilities that were previously unknown. The first surprise came in 2008/9 when China embarked on an immense stimulus program, where decade’s worth of infrastructure investment was fast tracked to counteract the global slowdown, a punishing period for anyone short at the time.


Eventually, the infrastructure boom came to an end, and there seemed to be an excess of housing in the market. Many funds were bearish on Chinese property developers in 2011, only to see the government promote housing investment. Many property stocks, went on to rally 300% or more. Your fund had been short property names, but having been caught on the wrong end of policy before, managed to avoid getting caught in this attack on bearishness.


Then in 2014, with the real exchange rate of the Renminbi surging as both Japan and Europe devalued their currencies via Quantitative Easing, it seemed that China was running out of options. If they cut interest rates to promote growth, then they would have to devalue. And yet, somehow the government was able to manufacture a stock market boom. This meant that capital that would usually leave China as interest rates were cut stayed in China to participate in the stock market.


Bearish investors in China had been picked off relentlessly and seemingly effortlessly by the government and the central bank. But then just as suddenly, the stock market started to sell off and the pressure on the currency began to build. This led to the small devaluation we saw in the Renminbi in August.


The People’s Bank of China (‘PBOC’) has fallen into a classic emerging market trap in my view. There was some pressure on the exchange rate, but they were unwilling to raise rates to defend the currency, so chose to devalue. However, as they wished to promote stability they devalued by a relatively small amount, in the hope that this will reduce capital outflows.  


In this they are completely wrong. The small devaluation will do nothing for the export sector, but creates huge amount of fear in the investing public, that has previously assumed the exchange rate was “safe”.Contrary to reducing pressure, the small devaluation will actually increase the capital outflow, and the pressure on the exchange rate. If the PBOC had really wanted to reduce capital outflow, it would have needed to move the exchange rate much more significantly.


In my experience, in the mind of the international investment community, small devaluations tend to encourage even more capital outflow, which in turn leads to even larger devaluations. Or to borrow a line from Predator, “If it bleeds, we can kill it”.

In the movie, the Predator dies.

As for the punchline, Clark goes out in style: “Your fund remains long bonds and short equities.”

Let us wrap up this week’s events with Greg Hunter of USAWatchdog

Dems Block Iran Nuke No Vote, Syria War Intensifies, Fed Rate Hike, Hillary in Deeper Trouble

4pngBy Greg Hunter’s WNW 207 9.11.15 

Democrats are going to try to block Republicans from killing the Iran nuke deal. The Republicans do not have the 60 votes needed to stop a Democrat filibuster. So, Obama will not have to veto the Republican bill to stop the deal from going through. The Democrats are not even going to allow a vote on the killing the deal. 10 Democrats are up for re-election and none of them want to be on record voting to allow it to go through. This is far from over as the Republicans are looking for ways to kill the deal and I am sure they will at least want Democrats on record to allowing this to go through. They know this is a bad deal if you want to call it that. It is really total capitulation as John Kerry admitted he did not have access to the deal on inspecting Iran’s military nuclear sites. Iran’s top brass has said it will not issue the permits to inspect its military sites. There really is no deal. This is nothing more than theater from the Obama Administration.

The war in Syria is intensifying as Russia now confirms its troops are fighting alongside of pro Assad forces against ISIS. This is not about Sunni verses Shia. Thus about oil and natural gas pipelines. Iran has one it wants and Qatar and the Saudis have one they want and both go right through Syria. The war is over the pipeline that Assad would not allow. The Russians are merely protecting their interests’ and market share in Europe. They are going to apparently fight to the death to find out who will be in control of Syria and the pipeline routs. I have been saying since 2009 that the Russians would not allow Syria fall and that is exactly what is going on.

The big question is will the Federal Reserve raise interest rates or not next week. If they do raise rates, then they want to intentionally crash the economy and let the air out of the stock market. The World Bank is warning the Fed not to raise rates because it would cause “panic and turmoil.”Gregory Mannarino, who called the stock market top in May, says either way the market is going to hate what the Fed dose on rates. If they raise them the market tanks and the bell rings on low rates. If they do not raise them then the market will know the economy is not in “recovery” and that too spells trouble.

Hillary Clinton is now criticizing President Obama and said that Americans “…need a leader who cares about them again.” I am not sure that criticizing the man who is in control of the country and the Justice department is a good idea especially when Ms. Clinton is in very hot water over her private email server while she as Secretary of State. So hot she has formally apologized for the “mistake.” Can you just apologize for breaking the law? More and more emails are coming out. Many experts say national security was breached because of Clinton’s use of this unprotected server. She already has one staffer who wants immunity to give information on her server. Now, Hillary’s top lieutenant, Huma Abedin, was investigated by the FBI last year for embezzlement after she filed phony time cards at the State Department.  I have predicted for months that Clinton will not be President. Bernie Sanders is not beating her in Iowa.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

see you on Monday


  1. Hong Kong COMEX?!?! What is that, it’s the first time I’ve ever heard a reference to Hong Kong COMEX.

    Perhaps the better term to use is Hong Kong Mercantile Exchange.


  2. Cash Converters UK, was such a huge success that Cash Converters International
    was able to list on the UK stock exchange, eventually buying back
    the UK licence.


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